The demise of many co-ops and United Healthcare’s threat to pull out of the Exchanges due to some $700 million in past and forecast losses has generated more speculation that ACA, the Exchanges, and health reform in general are in dire straits.
Deep breath here, folks.
First, historically United has not been known for expertise – or much interest – in the individual marketplace. Afer entering the Exchange markets late, it was operating in about 60% of the rating areas, an indication that the huge insurer jumped in to the market belatedly and then with both feet.
Second, United’s “big” losses are an estimate – UNH reported it lost around $500 million on ACA plans in 2015 (although it’s a bit early to come up with any number) and, depending on which source you read, is predicting it will lose hundreds of millions more this year. Given the huge insurer’s inability to predict financial returns on the front end, I’d suggest that these current predictions be taken with the proverbial grain of salt.
Third, the dominant low-cost insurers in the vast majority of health insurance rating regions are either Blues plans or Medicaid managed care organizations. So, while the Co-Ops Rubio-induced failure is a major issue, it by no means is a harbinger of system-wide collapse.
Remember, the health care financing and delivery system accounts for 17% of our GDP. It is going thru huge and wrenching changes, changes that mimic what we’ve seen in manufacturing, heavy industry, shipping, commodity production. If anyone thought this was going to be smooth, simple, easy, and predictable they were naive beyond belief.
Change is always destructive for some, an opportunity for others, and unpredictable at best. The genius of our economic system is that smart, adaptable, well-positioned companies will survive and thrive.
So, let’s not get too upset about United’s theoretical $720 million loss. That accounts for a whopping 0.42% of the company’s total revenue of $167 billion.
And, United’s departure from Exchanges opens opportunity for other health plans.
What does this mean for you?
Opportunity favors the prepared, and change is opportunity.