Why United healthcare is leaving the PPACA

While its not official, it is very clear that United Healthcare intends to leave the individual health marketplace next January 1.  Here is why:

  1.  Partial year insureds-  they sign up, run up a bunch of claims, and then stop paying premiums.  For example, they join, pay $400 a month for three months, have $100,000 heart surgery, and then stop paying premiums and cancel the insurance.  They are, by the way, free to do this every year!
  2. The exchanges are not attracting healthy individuals.  less than 30 percent of all enrollments are under age 34 – meaning more claims for less premiuns.
  3. Grandfathers Policies- while many states have recently allowed a big increase on these plans, as long as they exist, these (more likely healthy) people are not required to join the PPACA plans.
  4. Risk Corridor Payments- The bill promised a safety net on high claims, but paid only 12.5% of the promised amount.  That leaves a $2.5 billion shortfall – and that assumes the 12.5% ever actually gets paid (not as of today).  This is exactly the problem that put the Co-ops out of business (can you say HealthRepublic and Consumers Choice?)
  5. Pricing models- most people are buying the lowest price plans.

The only question I have is – are they the only major carrier that drops out?