Diary

Economics 101: Health insurance companies do not exist to provide health insurance

From The Wall Street Journal:

UnitedHealth Tops Expectations, to Leave Some Affordable Care Act Markets

U.S. health insurer will pare its presence from 34 states this year to “only a handful” in 2017

By Anna Wilde Mathews | Updated April 19, 2016 11:48 a.m. ET

UnitedHealth Group Inc. said it would remain in only a very small number of the Affordable Care Act’s marketplaces next year and suggested that it doesn’t currently see a way to run the business effectively.

The biggest U.S. insurer will pare its presence from 34 states this year to “only a handful” in 2017, said Chief Executive Stephen J. Hemsley during the company’s first-quarter earnings conference call. Mr. Hemsley said that the “smaller overall market size and shorter-term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis.”

UnitedHealth said it also steepened its projected loss on the 2016 exchange business to $650 million from around $525 million, amid signs that new enrollees’ health status appeared worse. The company booked a large chunk of that loss last year.

The announcement follows on UnitedHealth’s earlier signals that it was reconsidering its presence in the ACA exchanges. So far, regulators in five states have disclosed that UnitedHealth will withdraw from their states’ health-law marketplaces.

The potential departure of UnitedHealth would reduce the number of options for some consumers, particularly in certain rural and southern regions of United States. In some cases, according to a new analysis by the Kaiser Family Foundation, marketplace consumers now may have only one insurer option, unless more companies enter.

Government officials have said they expect insurers to enter and leave state marketplaces, and that they remain confident in the system.

Well, of course “government officials” would say that they “remain confident” in the system; the government official who did something really radical like tell the truth would quickly find himself a former government official. But it’s not like people weren’t warned.

UnitedHealth is not in business to provide health insurance; it is in business to make money, and providing health insurance is how the company does that. If a part of the providing health insurance doesn’t make money, there’s no reason to stay in that business. UnitedHealth’s Obumblecare sector was fairly small, so the company still made money, but the ACA sector was an over-regulated money loser. If the company is getting out of that business, it is because it makes sense for it to get out of that business.

Not that the left mind this: their goal was never really to have the private insurance companies extend insurance to everyone. Rather, their goal was to get to a single-payer health care system, like the VA Hospitals, and first they had to demonstrate that universal coverage could not be achieved and maintained through the private health insurance system. In that, they are succeeding very well.
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Cross-posted on The First Street Journal.