The announcement from insurance giant UnitedHealth about its possible exit from the health insurance exchanges may have repercussions for the hospital sector, Bloomberg reported.
UnitedHealth Group's change of heart about providing subsidized insurance to tens of millions of lower and middle-income Americans, according to the wire service, may play a significant role in how hospitals fare in the coming years.
Minnesota-based UnitedHealth, the nation's largest insurer, issued an announcement that took many in the healthcare sector aback, saying it was losing money on the state exchanges where it participated, and may wind up leaving them altogether by 2017. The announcement was a sudden about-face from a declaration in mid-October that it intended to expand its presence in the exchanges.
However, UnitedHealth also offered an extremely bullish earnings forecast for next year, suggesting it is sending mixed messages.
The Affordable Care Act has been particularly good for the bottom lines of publicly traded hospital chains, with Tenet Healthcare Corp. posting its best numbers in a decade as a result of the healthcare reform law.
Nevertheless, hospitals are "going to ratchet back their expectations for 2016," Mizuho Securities Analyst Sheryl Skolnick told Bloomberg. "They may feel real pressure in terms of growth in newly insured for next year. Nationally, we're seeing that reform is feeling kind of tired. It no longer has the momentum you'd need to feel optimistic for eliminating uncompensated care and treating the uninsured."
Skolnick also observed that some of the large for-profit hospital chains, such as Tenet Healthcare Corp. and HCA Holdings, Inc., have already agreed to some cuts in Medicare reimbursement as a result of flagging new enrollments through the exchanges.