UnitedHealth Dropping Out of States

By Pilar Martinez,  
Money & Investing Writer

When the words “Affordable Care Act” come to the surface, many people are knowledgeable of what it is and have strong opinions about the commonly known… Obamacare.

This system, like many others, have advantages and disadvantages towards society and people’s lives in general.

However, unlike the vast majority may think, health care affects all ages. A major concern for the upcoming generation is health insurance.

Adults and elders struggle with this now and may end up coming to more obstacles in the near future.  The biggest health insurer in the United States, UnitedHealthcare (NYSE: UNH), has announced its news on their dropping out of states, which participate in the Affordable Care Act.

By 2017, their map in the United States will be fewer, but the quality of the customers will be a better fit for the well-known health insurer.

A valid question is why and how was this decision made. According to CNN, CEO Stephen Hemsley is mentioned, “Hemsley explained that UnitedHealth will leave most states by 2017 because the markets for these exchanges are relatively small and also have higher risks for the company over the short-term”.

Although UnitedHealthcare helps people with their healthcare, at the end of the day it is a business too.

The nature of the business must comply with the needs of the market. This decision was not abrupt and certainly is for the better of the business because UnitedHealth simply could not effectively service the exchanges of the Affordable Care Act.

CNN states, “It shouldn’t come as a huge surprise. UnitedHealth had previously said that it lost $475 million on the ACA exchanges last year and could lose another $500 million this year. But Hemsley said that the company will ‘continue to remain an advocate for more stable and sustainable approaches to serving this market and those who rely on it for their care.’”

UnitedHealth is not abandoning its customers; it is just simply complying with the needs of the business in order to sustain a profitable market share. Which, in fact, rose 1.5 percent.

This is a fascinating statistic and allows for the revenue and earnings to go beyond the forecasts.

By entering the ACA market in the first place, UnitedHealth knew that it would need to take precaution because it could be a costly move. According to Today, UnitedHealth in fact lost billions of dollars by offering these plans in the first place.

The states affected and those involved according to WTVM states, “The health insurer had already indicated that it would drop plan coverage in Arkansas, Georgia and Michigan. Now its CEO says they will remain in only a handful of states by next year.”

Within a short period, these states will be narrowed down and both the health insurer company and the market with these exchanges will be back with their effective and efficient territories serving the providing those people who need their care.

A version of this article appeared in the Tuesday, April 26th print edition.

Contact Pilar at
pilar.martinez@student.shu.edu

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