U.S. Health insurer UnitedHealth Group (UNH) on Tuesday said it would largely exit the Obamacare individual insurance market in 2017, citing expectations for mounting losses from the program.
UnitedHealth is the largest U.S. Health insurer and one of the biggest sellers of plans on the exchanges, which were created as part of President Barack Obama’s national healthcare law. UnitedHealth sells these plans in 34 states this year, up from 25 states last year.
“Next year, we will remain in only a handful of states,” UnitedHealth CEO Stephen Hemsley said in prepared remarks as part of the company’s first-quarter earnings report.
The company warned investors late last year that it was losing money on the new plans and might exit the market. On Tuesday, the company raised its 2016 expectation for losses on the exchanges by $125 million to $650 million.
UnitedHealth’s Hemsley said that the shorter term, higher risk profile of the new members, as well as the smaller-than-expected enrollment, suggested UnitedHealth could not offer plans on a sustained basis.
For the first quarter, United Health’s profit was better than expected.
Other health insurers including Aetna (AET) and Anthem (ANTM) are also large players on the exchanges. In recent months they said they will continue to sell exchange plans.
The company has 795,000 customers from the exchanges, more than half of them new to UnitedHealth, it said. It expects about 650,000 members by year end.
The government said in February that more than 12 million people had signed up for Obamacare-related insurance through HealthCare.gov or a state-based exchange as of Jan. 31. Previous government expectations had been for more than 20 million people.