"Do I need to worry about my insurance," my father-in-law asked me.
I recently documented his extensive health issues. He's an enrollee in a UnitedHealth Medicare Advantage plan. So he was concerned when he read media accounts that UnitedHealth was contemplating leaving the state health insurance exchanges by 2017 because if was losing money on such enrollees. It also cut its fourth-quarter earnings forecast by about 5 percent.
Yet "no" was the short answer I gave my father-in-law--and not just because he's enrolled in a plan that isn't offered on the exchanges.
However, it's not a surprise he was concerned. The fretted, unexamined hand-wringing began immediately after the announcement. The Washington Post interviewed analysts to determine if the exchanges would "collapse." The Wall Street Journal blared this headline: "Biggest Insurer Threatens to Abandon Health Law." That story quoted UnitedHealth Stephen Hemsley saying "we can't sustain these losses." Slate's article contained the subhead: "Is the ACA Doomed?"
Certainly, if insurers pull out because of costs, premiums and out-of-pocket expenses will rise for enrollees. This would put pressure on hospitals to extend their charity care programs to cover some of those costs for insured patients.
But what I found infuriating among this coverage was not a single mention of UnitedHealth's net earnings forecast for 2016. It's in the range of $7.10 to $7.30 per share.
UnitedHealth's full 2015 forecast: $6.00 per share. In 2014, it earned $5.70 per share. In 2013, net was $5.50 a share.
In other words, despite those terrible, horrible, no good, very bad losses from the ACA, UnitedHealth expects to see its net income rise next year by 18 to 21 percent--more than triple its growth rate the past couple of years. And that's despite the insurer's planned 2016 expansion into new exchange markets such as Kansas.
There are certainly flaws in the ACA, particularly its meek cost controls. But it is not fatally flawed, and it has helped gain tens of millions of Americans health insurance, which in turn provides significant financial relief to hospitals.
However, in my view, the false dire forecast UnitedHealth issued made it clear that the ultimate goal of the U.S. healthcare system is to prioritize shareholders over patients. UnitedHealth could easily afford to subsidize its exchange business with the gargantuan profits it reaps elsewhere. Except it won't because it can make even more money not servicing this business at all.
Instead, UnitedHealth and other insurers will continue to raise premiums and out-of-pocket limits. Hospitals will continue to raise their chargemaster prices as part of the negotiation process. And those patients who don't own huge blocs of shares in the insurance and hospital sectors will continue to struggle to pay.
Of course, it's also becoming apparent that companies such as UnitedHealth have gradually painted themselves into a corner. In this era of stagnant wages, is it realistic to expect a household to spend, say, $35,000 or $40,000 a year for medical expenses, or their employer to insure them? We are sprinting down that path.
When that happens, the UnitedHealths of the world will be replaced by something the rest of the industrialized nations call single payer. I will read its earnings forecasts at that time with great interest. - Ron (@FierceHealth)