UnitedHealth rocked the healthcare industry last fall when it announced it might pull out of ObamaCare because it had suffered over $400 million in losses and couldn’t afford to take any more.
Now, another mega-medical insurer has gone public with its ObamaCare woes. Humana Inc. doesn’t expect to collect enough to cover the cost of ObamaCare customers and may drop out of ObamaCare in 2017.
Human expects its membership to drop from 500,0000 to 300,000 customers on both ObamaCare plans and older plans. To mitigate some of the shortfall, Humana is setting aside a backup fund called a premium deficiency reserve. However, they can’t do that indefinitely.
Instead Humana plans to shift its focus to Medicaid plans which provide a more sure funding (courtesy f the taxpayer). Humana’s individual Medicare Advantage plans will add 100,000 to 120,000 members and its prescription-drug plan will gain 300,000 to 330,000 customers.
The timing is surprising but not this announcement. Following UnitedHealth’s announcement, experts surmised that if the nation’s largest healthcare insurance provider was suffering such high losses, other providers were suffering too and probably worse. That’s because the Administration failed to deliver millions of new customers with the promised mix of healthy to unhealthy applicants. As a result, costs are skyrocketing for insurers prompting them to head for the door.
Bloomberg Business reports:
“We expect Humana will exit Health Insurance Exchange marketplaces in 2017 in light of this data and focus on its Medicare Advantage book of business,” Ana Gupte, an analyst with Leerink Partners, said in a note to clients Friday. Medicare Advantage is the private-sector version of the U.S. program for the elderly.
Humana, which is being acquired by Aetna Inc., said in a regulatory filing that it’s still working to determine the size of the shortfall…
The company said it plans to provide more information on its 2016 outlook when it releases fourth-quarter earnings on Feb. 10. Excluding costs tied to the premium deficiency reserve, 2015 adjusted earnings will probably be $7.75 a share, Humana said. The figure is in line with analysts’ expectations and the company’s November forecast.
The Administration is clinging to its fictional picture of an improving ObamaCare outlook, but as Fox News reports the insurance industry isn’t buying into anymore:
"The marketplace continues to be stable, vibrant and growing," Andy Slavitt, head of the Centers for Medicare and Medicaid Services, which administers the health overhaul's online insurance market, said on a conference call with reporters last week.
The administration is expecting a surge of young procrastinators to sign up near the Jan. 31 deadline for 2016 coverage. That could help hold down premiums the following year.
Despite the optimism from the Obama administration, an increasing number of insurance and medical experts, like Mount Sinai Health System President and CEO Kenneth Davis, have started to speak up about the problems facing ObamaCare.
“Premiums are going up, deductibles are higher and that’s a problem,” he said on CNBC, reversing optimistic comments he made only a year ago.
“What it’s all about is that not enough healthy people have signed up,” he said, creating a lopsided business model.
As we reported yesterday, the Administration is still struggling to get young people onto ObamaCare, hoping that higher penalties will be a prod.
The insurance companies didn't exercise good judgment and willingly went along with President Obama’s sales pitch. However, as we all know, if it sounds too good to be true, it probably is.