Why the healthcare industry shouldn't panic about UnitedHealth's ACA alarm

UnitedHealth Group has fired a warning shot at the Obama administration and state insurance officials, suggesting it will quit the individual marketplacesestablished by the Affordable Care Act by 2017 if more healthy people don't sign up and losses persist. 

The prospect raises red flags about the progress made in nurturing the insurance exchanges and their risk pools into mature and stable markets. But many believe that even if UnitedHealth does bail, it's by no means certain that other insurers—many of which have invested more time and energy into the exchanges—would immediately follow. And UnitedHealth may not quit either. Some analysts say the public griping from large insurers is intended to put pressure on the government to do more to mitigate their losses until the plans become profitable.

“They're probably trying to send a statement that these losses are real, especially since they are a (Wall) Street company,” said Chris Althoff, a partner at health insurance consulting firm Invoyent. 

UnitedHealth expects to lose more than $600 million this year and next from its individual exchange consumers. While nine-figure losses are intolerable for any insurance company, especially if the makeup of the marketplaces doesn't improve, Althoff said “there's too much of a future in the consumer markets” for UnitedHealth to walk away. “They'd be remiss if they did,” he said.

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