UnitedHealth halts sales commissions for ACA policies

After announcing that it may leave the Affordable Care Act marketplaces in 2017, UnitedHealth now has stopped paying sales commissions to agents who sell its ACA policies, the Raleigh, North Carolina News & Observer reports.

The nation's largest health insurer rocked the industry in late November when it abruptly adjusted its 2015 earnings outlook to account for mounting losses tied to its ACA exchange products. CEO Stephen J Hemsley was also critical of the exchanges, saying "we can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself" and later added that the insurer should have waited longer to enter the exchanges.

But while the Robert Wood Johnson Foundation's Kathy Hempstead recently told FierceHealthPayer that she'd be "surprised" if UnitedHealth really wanted to exit the ACA market, Wake Forest University law professor Mark Hall told the News & Observer that he's only seen insurers halt sales commissions when they're required to sell a product that they don't want to.

"Here, this seems consistent with an insurer that no longer wants to sell through the exchanges ... but is not allowed to withdraw immediately, so it's pushing its commissions to zero until it's allowed to exit," he said.

UnitedHealth hinted it would make such a move in its revised earnings report, saying that it would pull back on its individual exchange product market efforts for 2016. "Our current actions are consistent with our long-stated approach to continually evaluate the dynamics of exchanges as they evolve and adjust to changes in the market accordingly," company spokeswoman Tracey Lempner wrote in a statement emailed to the News & Observer.

The move poses a conundrum for many sales agents, though, as they now have no incentive to guide customers to UnitedHealth plans even if they are the best offered, and those who sell a large volume of UnitedHealth individual plans stand to lose thousands of dollars a year in commissions. The new policy goes into effect Jan. 1 in most of the two dozen states where the insurer sells ACA coverage, according to the article.

While other insurers have faced similar struggles on the exchanges, many recently said their individual market performance was as expected and that they were committed to operating in the ACA marketplaces through 2016. Cigna CEO David Cordani recently acknowledged, however, that the insurer hasn't yet made a profit on its exchange business.

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