While its not official, it is very clear that United Healthcare intends to leave the individual health marketplace next January 1. Here is why:
- 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!
- The exchanges are not attracting healthy individuals. less than 30 percent of all enrollments are under age 34 – meaning more claims for less premiuns.
- 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.
- 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?)
- 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?