UnitedHealth Group took a bigger bath on PPACA exchanges last year than even its pencil pushers projected, adding to the speculation that the company may stop selling health insurance via the exchange system.
In announcing its fourth quarter and full year 2015 financial results, the company said it lost $720 million in its exchange insurance segment — more than twice what it had been anticipating.
“Full year 2015 earnings from operations for UnitedHealthcare of $6.8 billion decreased $238 million from 2014, as operating margins declined to 5.1 percent. These decreases were driven by $720 million in losses related to individual exchange-compliant insurance business, including $245 million recorded in the fourth quarter of 2015 for the advance recognition of 2016 losses,” the company said in a release. “A fourth quarter reserve of $95 million was also established for expected future losses on a state Medicaid contract. … Reported fourth quarter 2015 earnings from operations of $949 million decreased $777 million year-over-year due to individual exchange-compliant product results, as well as investments to improve Medicare Stars quality performance.”
Company officials have said they expect losses of about $500 million on its 2016 exchange business. Overall, UnitedHealth Group is financially healthy and forecasts earnings per share of about $7.80 on $180 billion in revenue in 2016. Last year’s revenue was just under $160 billion, with EPS clocking in at $6.45.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
