Largest US insurer's move signals industry shift - KTRE.com | Lufkin and Nacogdoches, Texas

Largest US insurer's move signals industry shift

Posted: Updated:
(AP Photo/Jim Mone, File). FILE - This Tuesday, Oct. 16, 2012, file photo, shows a portion of The UnitedHealth Group Inc.'s  campus in Minnetonka, Minn. (AP Photo/Jim Mone, File). FILE - This Tuesday, Oct. 16, 2012, file photo, shows a portion of The UnitedHealth Group Inc.'s campus in Minnetonka, Minn.
  • NationalMore>>

  • Parents of slain USC student urge security boost

    Parents of slain USC student urge security boost

    Tuesday, July 29 2014 10:47 PM EDT2014-07-30 02:47:30 GMT
    Four teens were charged Tuesday with murder in the fatal beating of a University of Southern California graduate student with a baseball bat and wrench as he walked to his off-campus apartment after meeting with a...More >>
    The parents of a University of Southern California graduate student who was beaten to death on his walk home say they are concerned about other students and hope the university increases security.More >>
  • Broken water main floods UCLA; people rescued

    Broken water main floods UCLA; people rescued

    Tuesday, July 29 2014 10:47 PM EDT2014-07-30 02:47:22 GMT
    A broken water main near the UCLA campus Tuesday sent a geyser of water some 30 feet into the air, forced the rescue of people trapped in underground parking garages and covered some of the best-known parts of...More >>
    A broken water main near the UCLA campus Tuesday sent a geyser of water some 30 feet into the air, forced the rescue of people trapped in underground parking garages and covered some of the best-known parts of campus in...More >>
  • Man wrongly imprisoned seeks millions from state

    Man wrongly imprisoned seeks millions from state

    Tuesday, July 29 2014 10:15 PM EDT2014-07-30 02:15:45 GMT
    A man who was imprisoned 21 years for a rape and murder he didn't commit is set to testify at a first-ever Connecticut hearing to determine how much he should be compensated.More >>
    A man cleared of murder and rape charges after being locked up for two decades made an emotional appeal for millions of dollars in compensation on Tuesday, telling the state claims commissioner about the fear he endured in...More >>
By TOM MURPHY
AP Business Writer

The nation's largest health insurer expects to play a much bigger role in the health care overhaul next year, as the federal law shifts from raising giant questions for the sector to offering growth opportunities.

UnitedHealth Group said Thursday that it will participate in as many as 24 of the law's individual health insurance exchanges in 2015, up from only four this year.

These state-based exchanges debuted last fall as a way for customers to buy individual health insurance, many with help from income-based tax credits. They played a key role in helping roughly 8 million people gain coverage for 2014.

But UnitedHealth and other insurers approached them cautiously, in part because they had little information about the health of the people who would sign up. That uncertainty was compounded by a provision in the overhaul that prevents them from rejecting applicants based on health.

Now, some of that uncertainty is starting to dissipate, which gives insurers "a little more confidence to try to tap into some of the opportunities," said Jennifer Lynch, an analyst who covers the sector for BMO Capital Markets.

"I think the hesitation on the part of the companies has really been largely because of the unknowns," Lynch said.

UnitedHealth CEO Stephen Hemsley told analysts on Thursday that the insurer had always planned a prudent, initial approach. But they also understand that the exchanges will become a more established part of future health care benefits, and they don't want to enter the market too late.

"We've always felt it was part of our strategy and plan, and this is a good long-term market, UnitedHealth's Executive Vice President Gail Boudreaux added.

The overhaul also is helping UnitedHealth outside the public exchanges. The insurer said Thursday that its Medicaid enrollment jumped nearly 19 percent to about 4.7 million people compared with last year's quarter. About half of that growth came from Medicaid coverage expansions called for in the law.

Medicaid is the state-federal program that covers the poor and elderly people. States hire insurers to administer the coverage.

To be sure, major insurers don't see the overhaul as a pure growth driver. The customers they gain from the law known as the Affordable Care Act generally make up a small slice of their overall business. The Medicaid business that UnitedHealth added also delivers a thinner profit than private coverage.

Insurers also have repeatedly complained about how the law trims funding for their privately run Medicare Advantage plans and how it imposes an industry-wide tax, which is not deductible. They've had to cut costs to balance those challenges, which haven't gone away.

In fact, United Health cited costs tied to the overhaul as a factor behind the 2 percent drop in second-quarter profit it reported on Thursday

And while insurers are getting a better handle on their exchange customer base, plenty of uncertainty remains.

Technology glitches and crashes marred last year's debut of the health care overhaul's public insurance exchanges. The federal government improved the exchanges, but insurers remain worried about their ability to handle new enrollment for next year and the millions of people who will have to sign up for coverage again.

"I still think there are going to be bumps," WellPoint Inc. CEO Joseph Swedish told The Associated Press last month. "I'd say we're very, very cautious about the challenges that are going to be not only thrust upon us as a health plan but also the challenges that are going to be thrust on the enrollee."

Despite challenges the law presents, Lynch, the BMO Capital Markets analyst, expects that more insurers will deepen their stake in overhaul-related business.

"Ultimately ... the law can provide the managed care companies access to membership that had previously fallen outside the system," she said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow
KTRE logo

KTRE

358 TV Road,
Pollok TX 75969

FCC Public File
publicfile@ktre.com
936-853-8639
EEO Report
Closed Captioning

All content © Copyright 2000 - 2014 Worldnow and KTRE. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.