UnitedHealthcare, the U.S.'s largest health insurer, says that it is considering quitting Obamacare in 2017, just a month after the company said that it planned to expand its presence in the Affordable Care Act's online marketplace.
"We cannot sustain these losses," UnitedHealthcare CEO Stephen Hemsley said in an investor call Thursday morning, according to Maine's NPR News. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
The company said that it is lowering its earnings forecast for the year and expects to make $425 million less than previously estimated, according to Fortune. UnitedHealthcare is also scaling back marketing efforts designed to convince current enrollees to register under plans it is selling on the federal health care marketplace this year.
"In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step," Hemsley wrote in a news release.
The insurer is evaluating the viability of the Obamacare marketplace "and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017," UnitedHealthcare said in the statement.
UnitedHealthcare only covered some 550,000 of the 9.9 million people who had insurance through the U.S and state-run insurance markets as of June 30, according to Bloomberg.
However, the nation's largest insurance company opting out of Obamacare would be a significant blow to President Obama's signature policy achievement and could indicate that the exchange is not as viable an enterprise as once thought, Sheryl Skolnick, an analyst at Mizuho Securities, told Bloomberg.
"If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can't make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise," Skolnick said.
UnitedHealthcare seemed much more optimistic in its assessment last month, saying that it planned to sell coverage in 11 new markets next year, bringing its total to 34. "I think we'll see strikingly better performance on the insurance exchange business" next year, Chief Financial Officer David Wichmann told analysts on an Oct. 15 conference call.
About a dozen state Obamacare co-ops largely funded through federal loans have already failed due to charging too little to cover costs of medical care, and because the Obama administration fund that is designed to protect health insurers from risk only paid out 12.6 percent of what the companies requested, according to CNN.
