UnitedHealth Group is the largest US health insurer. The group said that it would pull back from participation in the Obama administration's signature health care reforms because it lost money on the program.
UnitedHealth said, "It would drop out of most of the state exchanges for individual insurance policies created under the Affordable Care Act, or Obamacare, because the policies are not profitable."
‘UnitedHealth is opting out of most of the individual insurance policies created under the Affordable Care Act, or Obamacare, because the policies are not profitable.’
"Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017," UnitedHealth chief executive Stephen Hemsley said in presenting the company's first-quarter earnings.
UnitedHealth warned in 2015 that it could exit the public exchanges established under President Barack Obama's sweeping reform of the health care industry that took effect in January 2014.
The reform extended health insurance coverage to millions more Americans and pushed states to launch marketplaces where individuals can shop for the best price and coverage of insurance policies before signing a contract.
UnitedHealth warned in November that it could lose up to $500 million from the public exchange business this year. In Tuesday's conference call with analysts, it raised the estimate to $650 million.
UnitedHealth said that there were not enough people in good health participating in the exchanges to offset the cost of those needing care. The company is currently present on 34 exchanges.
As a result, however, some of the marketplaces could be left with only one participating insurer, contrary to the intent of the law to stimulate competition to hold down health care costs.
The Affordable Care Act is a main target of opposition Republicans seeking to dismantle it.
UnitedHealth announced that better-than-expected financial results for the first quarter. Revenue surged 24.3% from a year ago to $45 billion and net income grew 15.4% to $3 billion.
Shares of the Dow member gained 1.7% to $129.98 in afternoon trade.