The CEO of UnitedHealthcare, the biggest U.S. health insurer, said Tuesday that the company should not have entered the Obamacare marketplace last year because it has resulted in millions of dollars in losses.
"It was for us a bad decision," UnitedHealth CEO Stephen Hemsley said at an investor's meeting in New York, according to Bloomberg.
UnitedHealth announced last month that it has lowered its earnings forecast and already begun to scale back its efforts to market coverage to people shopping for insurance in the Affordable Care Act's marketplace for 2016. Losses from this year and next are expected to total more than half a billion dollars, and the company said it might quit the marketplace in 2017 due to unsustainable conditions, as HNGN previously reported.
"We cannot sustain these losses," Hemsley said in an investor call in November, according to Maine's NPR News. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
UnitedHealth held off joining the marketplace when it launched in 2013 and finally started selling plans on the exchange last year, but Hemsley said the company should have sat out another year, according to The Hill.
"I take accountability for sitting out the exchange market in year one so we could in theory observe, learn and see how the market experience would develop. This was a prudent going-in position. In retrospect, we should have stayed out longer," Hemsley said.
He added that he believes the marketplace will take more than "a season or two" to fully mature. "We did not believe it would form this slowly, be this porous, or become this severe," he said.
Hemsley said UnitedHealth's other business ventures are faring much better than the exchange, through which it serves a relatively small number of people - 540,000. The company expects its operating earnings will be more than $13 billion next year, on revenues of $180 billion, according to Bloomberg.
