UnitedHealth Group Inc., the biggest U.S. health insurer with more than 42 million medical customers, is withdrawing from most of its Obamacare exchanges next year and that could spell doom for President Obama’s hallmark health policy.
“Obamacare might collapse if the health insurance companies continue to withdraw from the exchanges,” writes Diana Furchtgott-Roth
, a senior fellow and director of Economics21 at the Manhattan Institute. “Look at UnitedHealthcare as the canary in the coal mine, and expect more withdrawal announcements in the future.”
The Affordable Care Act was signed into law by President Obama in 2010 with the goal of overhauling the U.S. healthcare system and reducing the number of uninsured by 32 million. The plan has fallen short of that goal and Congress has voted more than 50 times to repeal the law but hasn’t passed a replacement plan.
UnitedHealth last week confirmed that it wouldn't sell Obamacare plans next year in Georgia and Arkansas. Customers in those states will have to choose a new health insurance provider next year.
The company simply can’t make money on Obamacare plans without generous bailouts from Congress, which isn’t willing to cough up the funds during its budgeting process, Furchtgott-Roth says.
“UnitedHealthcare and other insurance companies thought that they would have a captive market of young, healthy people who would be forced to sign up for expensive policies with the threat of penalties,” she says. “Little did these insurance companies know that enrollment would fall far short of predictions.”
Enrollment in the exchanges is estimated by Health and Human Services Secretary Sylvia Burwell to be 12.7 million in 2016, compared with 22 million predicted by the Congressional Budget Office in May 2013.
“Insurance companies were relying on payments from the federal government to constrain their losses,” according to Furchtgott-Roth. “If Congress holds its ground during the appropriations process and refuses to bail out the insurance companies for fiscal 2017, it is likely that more of them will withdraw from the exchanges, raising prices for existing customers.”
This week, a four-person task force of senior Republicans in the House has promised to reveal some progress in its quest to offer a replacement for Obamacare.
"Give us some time, another month or so," said Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee and a member of the task force working on a replacement plan for the healthcare law, The Hill reported
. "I think we're pretty close to a Republican alternative."
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