UnitedHealth warns it may exit Obamacare plans

[Darwin333]

I agree, in many situations upfront pricing would be hard. But it shouldn't be hard for an office visit, imaging or basic out patient surgery. Even if you can get them to give you a price range, it is generally way off and after insurance. Changing how the system works, though, would also reduce cost. If instead of charging for each and every item, you had a general overhead rate and materials rate for basic items (like most industries) it would drastically reduce the complexity of billing and accounting.

There is a well known hospital that is cash only, no insurance, medicaid or medicare. Credit card, check (after it has cleared) or cold hard cash that does a lot of the most common surgeries performed. Somehow they have no problem whatsoever posting their prices, you can even find them on their webpage.

Emergency procedures I can understand not being able to dial in an exact price upfront but everything else they already know. You are foolish to believe that an industry that large doesn't know what the costs of it's services are ahead of time within a 10ish% swing.

 

[glenn1]

You have a very good point. The big difference is that medical treatment is a realistically attainable goal. Doctors really can provide effective treatment.

<snip>

Fortunately, the goals of medical care are attainable. It's not that amazingly difficult to fix a broken arm or to diagnose an infection and prescribe antibiotics or to remove a gallbladder. In contrast, if the goal were to provide Americans with immortality at any cost or to make sure that no one ever drowns or dies in a car accident, then it would be expensive and unworkable, just like our education policy.

Fair enough, what you consider as being the 'success criteria' for medicine (socialized or otherwise) makes a big difference. "Free" primary care and vaccinations is an entirely different matter than the typical "almost every possible care provided" employer-provided health insurance plan. Unfortunately I don't think those advocating for single payer would be satisfied with anything less than the later being provided by government.

That's an interesting way to look at it. So which school systems around the world provide better and cheaper education that aren't socialist?

Or was your point that our particular government isn't very good at socialism? And if that was the point then why do you think that is? Why is it other nations that practice some sort of socialism do a better job than us?

You tell me - probably because most Americans agree with the abstract idea of socialism until they see the costs entailed and decide it's not a good cost/value proposition? Unless you think you're going to do better in a socialist system (or at least come close to breaking even) most people just aren't that altruistic to support their fellow man. Which is exactly why I always lambaste your side for your "collective action problem" when asked about your private charity which would reduce the need for government action if not eliminate it in some cases. People are especially wary of the socialism they're asked to pay for when many of those in need had a big part in causing the need by their own actions.

Maybe because our education system is dominated by local districts which do not emphasize the same course work, etc., as other districts, instead of a national standardized curriculum?

Take southern schools. Horrid reputation. Way too much political influence in designing their curricula. So why do you think the educational system will be in any way a predictor for universal/single payer health care?

Medicare is already handled at the state level and "Medicare for all" is exactly what the fans of Single Payer are advocating. Thus the 'local district' and 'political influence' problems will not go away with Single Payer and in fact will likely be hugely magnified.

 

[theeedude]

Which countries that Reagan liberated from Socialism got rid of universal single payer health care?

 

[Jhhnn]

People are especially wary of the socialism they're asked to pay for when many of those in need had a big part in causing the need by their own actions.

Merely an affirmation of erroneous belief. Well, unless those people vote Republican, the Party of the rich, for the rich & by the rich, the party that champions unfathomable greed at the top. In that case, they'd be fucking themselves, no doubt.

The truth is that Unions are socialist, now mostly beat down to a shadow of their former selves. So are truly progressive taxes, discarded during the Reagan era. So are tariffs & regulated industries, all discarded piecemeal over the last 40 years along with meaningful regulation of finance. We live in a Capitalist Utopia- for Capitalists, of course. They've had it all mostly their way for decades & it shows in the massive shift of wealth & income to the tippy-top.

It's clear to anybody with more than a few grey cells to rub together that the business & financial leadership of this country has no intention of creating sufficient decent paying jobs in this country to support a vibrant middle class. It's not in their selfish interests or they already would have done so. Merely observable fact.

So if we want a vibrant middle class we need to find alternatives beyond the whims of the wealthy. In that, Repubs offer nothing but more of the same failed trickle down cliches & excuses, the same victim blaming as always.

Due to offshoring & automation, there's a labor glut in this country, has been for decades, & the people at the top, the rentier class, will continue to exploit it as much as possible. And they'll do their best to convince the rubes that poor people, people who have no power, are dragging us down rather than the greed of the powerful pushing us down.

In case you hadn't noticed, that's how they led us to this place, to the economic circumstances we find ourselves in. That's reality. The people at the top sure as Hell won't change anything other than to be more in their favor so it's up to the rest of America to do so if we want a decent share of the pie. Or we can just continue worshipping them for their ability to hog the whole thing.

 

[Bowfinger]

Medicare is already handled at the state level and "Medicare for all" is exactly what the fans of Single Payer are advocating. Thus the 'local district' and 'political influence' problems will not go away with Single Payer and in fact will likely be hugely magnified.

You're thinking of Medicaid. Medicare is handled at the federal level. Medicare has some problems, but has been largely immune to the Medicaid fiascoes of some states.

 

[sactoking]

Just FYI- UnitedHealth's claims of unprofitable exchange business appears to be BS.

On Thursday CMS released the insurer-level results of the 2014 risk corridor program for public inspection. You may remember the risk corridor program as one of the "3 Rs" designed to soften the impact of the ACA reforms. This program in particular was responsible for collecting money from profitable QHP business and distributing it to unprofitable QHP business. This is also the program that was gutted under the "Cromnibus" bill so that it only paid 12.6 cents on dollar for 2014 claims (and likely directly led to the insolvency of many of the Co-Ops).

In 2014 United was in the individual exchange market in only a few states (New York, Nevada, etc.). Of the individual exchange market states it was in it was due risk corridor payments in NONE. This means that NONE of their individual exchange market business was considered unprofitable. In total, United paid over $600,000 into the risk corridor program nationwide for profitable individual exchange market business.

United played in many more states in the SHOP markets in 2014. It was liable for risk corridor payments for profitable business in many of them, to the tune of over $4,000,000 in payments nationally due to profitable business. It also had unprofitable business in several states, to the tune of being owed $12,094 due to unprofitable business.

This tells me that not only was United's exchange business exceptionally profitable in 2014, but the Cromnibus shenanigans also are working to make it even more profitable, since United only got shafted out of $10,570 nationwide from the crippling of the risk corridor payments while benefiting from the artificial insolvencies of the Co-Op competition.

 

[werepossum]

Just FYI- UnitedHealth's claims of unprofitable exchange business appears to be BS.

On Thursday CMS released the insurer-level results of the 2014 risk corridor program for public inspection. You may remember the risk corridor program as one of the "3 Rs" designed to soften the impact of the ACA reforms. This program in particular was responsible for collecting money from profitable QHP business and distributing it to unprofitable QHP business. This is also the program that was gutted under the "Cromnibus" bill so that it only paid 12.6 cents on dollar for 2014 claims (and likely directly led to the insolvency of many of the Co-Ops).

In 2014 United was in the individual exchange market in only a few states (New York, Nevada, etc.). Of the individual exchange market states it was in it was due risk corridor payments in NONE. This means that NONE of their individual exchange market business was considered unprofitable. In total, United paid over $600,000 into the risk corridor program nationwide for profitable individual exchange market business.

United played in many more states in the SHOP markets in 2014. It was liable for risk corridor payments for profitable business in many of them, to the tune of over $4,000,000 in payments nationally due to profitable business. It also had unprofitable business in several states, to the tune of being owed $12,094 due to unprofitable business.

This tells me that not only was United's exchange business exceptionally profitable in 2014, but the Cromnibus shenanigans also are working to make it even more profitable, since United only got shafted out of $10,570 nationwide from the crippling of the risk corridor payments while benefiting from the artificial insolvencies of the Co-Op competition.

As I guessed. In my experience whenever a company really intends to leave a non-viable market or product, they do so quietly. When they are loudly proclaiming their intent to leave, it's usually an attempt to win some concession to make it even more profitable.

 

[boomerang]

But sactoking is talking about things that happened in 2014. We're close to wrapping up 2015 and UnitedHealth is saying that they may not be participating in 2017.

http://thehill.com/blogs/pundits-blog/healthcare/260948-obamacares-predictable-collapse

But failing co-ops are only a small part of the problem for the ObamaCare house of cards. The largest health insurer in the country, UnitedHealthcare, just announced that they are unlikely to participate in the ObamaCare health exchanges in 2017 and are limiting their marketing for customers through exchanges in 2016.

The rollout of Obamacare has been greatly delayed due to the executive actions of our commander in chief. The result for anyone paying attention is that each year brings a new facet or facets into play. Because of this, I see little value in citing what occurred in 2014 as being relevant to what may happen in 2017. The business model of health care is by nature of the Obamacare legislation not even remotely a stable or even predictable one.

The Wall Street Journal quotes UnitedHealth Group Chief Executive Stephen J. Hemsley as saying, "We can't sustain these losses," further explaining, "We can't subsidize a market that doesn't appear at this point to be sustaining itself."

 

[s0me0nesmind1]

But sactoking is talking about things that happened in 2014. We're close to wrapping up 2015 and UnitedHealth is saying that they may not be participating in 2017.

http://thehill.com/blogs/pundits-blog/healthcare/260948-obamacares-predictable-collapse

The rollout of Obamacare has been greatly delayed due to the executive actions of our commander in chief. The result for anyone paying attention is that each year brings a new facet or facets into play. Because of this, I see little value in citing what occurred in 2014 as being relevant to what may happen in 2017. The business model of health care is by nature of the Obamacare legislation not even remotely a stable or even predictable one.

Ding ding. Companies are known for crunching numbers to best analyze future outcomes/performance to realize possible problems down the line.

And Sactoking is posting his own analysis. Not a documented article.

 

[werepossum]

Ding ding. Companies are known for crunching numbers to best analyze future outcomes/performance to realize possible problems down the line.

And Sactoking is posting his own analysis. Not a documented article.

Personally I'd trust Sactoking's analysis, which has been scrupulously fair, above any documented article which is probably written with one blatant bias or another. Don't forget, he based his comments on the official numbers from the Center for Medicare/Medicaid Services. It's possible that United Health may pull out; personally I judge it unlikely, though I'm certainly no expert. But in general, companies tend not to walk away from profitable business because it's not as profitable as the rest of their business unless that chunk can be easily replaced with more profitable business. I don't see that happening in health care, at least not until all the major competitors pull out of the exchanges. Even then, they still have to meet the Obamacare requirements, which are what drives up the cost. I'd guess they are merely lobbying to have that 12.6% reimbursement flipped to 87.4% because if they walk away from the risk corridor business, their overall profit will almost certainly be down.

Of course, I could be wrong. By participating in the exchanges, United Health pays in $600,000 (which is used to subsidize unprofitable competitors, usually non-profit co-ops trying to deliver better insurance at less cost than the for-profits) and gets back around 2% of that. But in exchange for that, United Health has convenient places for people to buy its products, which typically are long term recurring revenue streams. Given that the risk corridor program is probably doomed anyway and seems to have been a failure, I'm guessing United Health et al get the program (which they don't need) ended instead of walking away from the exchanges and all the business they bring. If so, costs from the non-profits whose business models depended on bad assumptions will increase, so people in the co-ops will see their rates increase. That is not a bad thing, it is simply the market finding the appropriate pricing level.

 

[glenn1]

Personally I'd trust Sactoking's analysis, which has been scrupulously fair, above any documented article which is probably written with one blatant bias or another. Don't forget, he based his comments on the official numbers from the Center for Medicare/Medicaid Services. It's possible that United Health may pull out; personally I judge it unlikely, though I'm certainly no expert. But in general, companies tend not to walk away from profitable business because it's not as profitable as the rest of their business unless that chunk can be easily replaced with more profitable business. I don't see that happening in health care, at least not until all the major competitors pull out of the exchanges. Even then, they still have to meet the Obamacare requirements, which are what drives up the cost. I'd guess they are merely lobbying to have that 12.6% reimbursement flipped to 87.4% because if they walk away from the risk corridor business, their overall profit will almost certainly be down.

Of course, I could be wrong. By participating in the exchanges, United Health pays in $600,000 (which is used to subsidize unprofitable competitors, usually non-profit co-ops trying to deliver better insurance at less cost than the for-profits) and gets back around 2% of that. But in exchange for that, United Health has convenient places for people to buy its products, which typically are long term recurring revenue streams. Given that the risk corridor program is probably doomed anyway and seems to have been a failure, I'm guessing United Health et al get the program (which they don't need) ended instead of walking away from the exchanges and all the business they bring. If so, costs from the non-profits whose business models depended on bad assumptions will increase, so people in the co-ops will see their rates increase. That is not a bad thing, it is simply the market finding the appropriate pricing level.

Completely wrong. If a business activity doesn't meet the acceptable hurdle rate then the company will typically divest or shutter the activity regardless if it's nominally profitable. That's true regardless of whether the activity is health insurance or something different.

 

[sactoking]

I'd submit that 2014 is valid data. Because of the delayed nature of things these decisions have to be made months or years in advance. For example I know they're working on 2017 plan design now because they'll have to submit them for approval probably in March. They can't use 2016 data because, well, obviously. They can use 2015 data to a certain degree but the year isn't done and it will be months before their 2015 medical loss ratio and 3 Rs numbers are finalized. So, even though it's a big temporal gap, 2014 is the best, most complete data they have for making 2017 decision.

The analysis I presented here is based on work done by Tim Jost, a leading independent analyst of the ACA. He is, among other things, an advocate for consumers funded by the insurance regulators. I've known him for a few years through professional conferences and he is quite astute. IMO he is a proponent of the ACA, which is why I filter and double check his work for biases, but he is undoubtedly knowledgeable.

 

[sactoking]

I'd also say that while other business factors may play a part in their decision they did not cite them in their statements. AFAIK their primary (sole?) stated reason for considering leaving the exchanges was profitability which, upon examination, doesn't appear to be correct.

 

[glenn1]

I'd also say that while other business factors may play a part in their decision they did not cite them in their statements. AFAIK their primary (sole?) stated reason for considering leaving the exchanges was profitability which, upon examination, doesn't appear to be correct.

Again, if it really is *that* profitable then doubtless some other company will swoop in to pick up the slack. To me this simply might represent the difference in worldview between a for-profit healthcare company and a civil servant in a non-profit government. Since they're basically on opposite sides of the table (one wants to maximize profits, the other minimize them to recognize the cost savings) it stands to reason they would have a very different views on what constitutes a "reasonable profit." You get to a point where even a potential for high profits isn't worth the hassles involved because you never know if the government will continue acting in good faith to keep those profits going when being more adversarial is in its best interests, sort of a variation on Prisoner's Dilemna.

 

[sactoking]

Very true, with the caveat that in this particular case they avoid few if any of the added hassles owing to the fact that the bothersome reforms are market wide. In some states, like California, they avoid hassle because Covered California is a pain in the ass but in most, including the healthcare.gov states, there isn't really a difference between operations in and out of an exchange.

 

[Genx87]

Wasnt this a quarterly call? I don't think they can lie about profitability and outlooks without getting into trouble with the SEC.

I think they are probably not blowing too much BS about profitability on high risk plans. It will take a few years for them to grasp the risk, costs, ect before it evens out. I think we are seeing some of this in the double digit requests in premium increases for 2016.

 

[glenn1]

Very true, with the caveat that in this particular case they avoid few if any of the added hassles owing to the fact that the bothersome reforms are market wide. In some states, like California, they avoid hassle because Covered California is a pain in the ass but in most, including the healthcare.gov states, there isn't really a difference between operations in and out of an exchange.

Utilize Occam's Razor; which of these seems most likely to be true?

A. UnitedHealth is exiting a very profitable market and leaving easy money on the table to make an oblique political point about Obamacare;

B. UnitedHealth is exiting a market deemed slightly profitable after accounting for risk, level of effort, and the government desires to control costs that were a core element of Obamacare; and thus management has decided the profit involved isn't worth the continued resources needed to make that small profit; OR

C. UnitedHealth is exiting a breakeven or unprofitable market where the constraints and burdens of Obamacare will make any company lose money, even if competitors exit the market and competition is reduced.

 

[s0me0nesmind1]

Wasnt this a quarterly call? I don't think they can lie about profitability and outlooks without getting into trouble with the SEC.

I think they are probably not blowing too much BS about profitability on high risk plans. It will take a few years for them to grasp the risk, costs, ect before it evens out. I think we are seeing some of this in the double digit requests in premium increases for 2016.

They can't BS in general. They wouldn't BS in general.

Everything they do and say has a direct affect on share price and shareholders. They aren't going to act like "We are doing shitty, no one buy our stocks". You are absolutely correct.

And the last thing I would trust is the words from an ACA advocate. Seriously. This far down the line, half the companies that came into the market are gone - no one else is entering it. Rate hikes have been skyrocketing. But all is well, amirite?

 

[boomerang]

Utilize Occam's Razor; which of these seems most likely to be true?

A. UnitedHealth is exiting a very profitable market and leaving easy money on the table to make an oblique political point about Obamacare;

B. UnitedHealth is exiting a market deemed slightly profitable after accounting for risk, level of effort, and the government desires to control costs that were a core element of Obamacare; and thus management has decided the profit involved isn't worth the continued resources needed to make that small profit; OR

C. UnitedHealth is exiting a breakeven or unprofitable market where the constraints and burdens of Obamacare will make any company lose money, even if competitors exit the market and competition is reduced.

:thumbsup:

What I like about all this is that UnitedHealth still has a choice. If they want to get out they can get out. In our current world of ever diminishing choices and with our government leading that charge, having a choice is a great option to have. This undoubtedly will change. We just don't know what direction that change will take.

 

[boomerang]

But all is well, amirite?

Absolutely! Until January 20th of 2017 for sure.

 

[zephyrprime]

It was a mistake to make participation in the exchanges optional. The exchanges should provide information on plans independently of the companies since all that information is public knowledge anyway. The insurance companies should be required to accept public funds for any person who signs up who has government money.

 

[sactoking]

Utilize Occam's Razor; which of these seems most likely to be true?

A. UnitedHealth is exiting a very profitable market and leaving easy money on the table to make an oblique political point about Obamacare;

B. UnitedHealth is exiting a market deemed slightly profitable after accounting for risk, level of effort, and the government desires to control costs that were a core element of Obamacare; and thus management has decided the profit involved isn't worth the continued resources needed to make that small profit; OR

C. UnitedHealth is exiting a breakeven or unprofitable market where the constraints and burdens of Obamacare will make any company lose money, even if competitors exit the market and competition is reduced.

Believe me or not, but having witnessed health insurer operations on the matter firsthand from 2010-2014 I would say this is inapplicable. We have a few United subsidiaries here, one of them is our largest insurer by premium volume, and you would not believe the garbage they have tried to pull to make obscure political points. Hell, we had a United subsidiary that was operating in direct violation of the law for over a year to make a political point and we did nothing about it (not by my choice) because we "couldn't afford to disrupt the market" by regulating them properly.

 

[s0me0nesmind1]

It was a mistake to make participation in the exchanges optional. The exchanges should provide information on plans independently of the companies since all that information is public knowledge anyway. The insurance companies should be required to accept public funds for any person who signs up who has government money.

I think one of the biggest health insurance problems is the fact that health care providers can choose what they do and do not accept.

In-Network vs. Out of Network is one thing, but places can outright deny your insurance coverage altogether. That is INSANE to pick and choose which insurance tickles your fancy.

When you need emergency medical attention the last thing you are thinking is "OH SHIT! Do they take my insurance? QUICK, TURN AROUND AND GO THE OTHER WAY! They don't take my insurance!"

Part of the reason we just need to scrap it all and go with Single Payer. God knows the ACA didn't help this shit.

 

[Jhhnn]

Utilize Occam's Razor; which of these seems most likely to be true?

A. UnitedHealth is exiting a very profitable market and leaving easy money on the table to make an oblique political point about Obamacare;

B. UnitedHealth is exiting a market deemed slightly profitable after accounting for risk, level of effort, and the government desires to control costs that were a core element of Obamacare; and thus management has decided the profit involved isn't worth the continued resources needed to make that small profit; OR

C. UnitedHealth is exiting a breakeven or unprofitable market where the constraints and burdens of Obamacare will make any company lose money, even if competitors exit the market and competition is reduced.

Believe me or not, but having witnessed health insurer operations on the matter firsthand from 2010-2014 I would say this is inapplicable. We have a few United subsidiaries here, one of them is our largest insurer by premium volume, and you would not believe the garbage they have tried to pull to make obscure political points. Hell, we had a United subsidiary that was operating in direct violation of the law for over a year to make a political point and we did nothing about it (not by my choice) because we "couldn't afford to disrupt the market" by regulating them properly.

Thanks for confirming that Glenn1 left off an obvious choice, that United is blowing smoke.

 

[Jhhnn]

I think one of the biggest health insurance problems is the fact that health care providers can choose what they do and do not accept.

In-Network vs. Out of Network is one thing, but places can outright deny your insurance coverage altogether. That is INSANE to pick and choose which insurance tickles your fancy.

When you need emergency medical attention the last thing you are thinking is "OH SHIT! Do they take my insurance? QUICK, TURN AROUND AND GO THE OTHER WAY! They don't take my insurance!"

Part of the reason we just need to scrap it all and go with Single Payer. God knows the ACA didn't help this shit.

Wrong-

Health plans cannot require:

Higher copayments or co-insurance for out-of-network emergency room services

Approval before seeking emergency room services from a provider or hospital outside your plan’s network

http://www.hhs.gov/healthcare/about-the-law/er-access-and-doctor-choice/index.html