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Urban Institute confirms: UnitedHealth shot themselves in foot, trying to blame ACA

Back in November, one of the big ACA stories was UnitedHealthcare, shortly after releasing third quarter financial results which made it sound like all was well with their ACA exchange business, dropping a bombshell only a month later stating that they were losing hundreds of millions of dollars on the exchanges and were very likely to drop out next year.

This caused all sorts of shockwaves among the insurance industry, and of course gave ACA critics more ammunition with which to attack Obamacare as a whole, calling it evidence of the system being a failure, etc etc...even though several other major insurance carriers on the exchanges didn't seem to be complaining (or at least weren't making it out to be nearly as dire of a situation as UHC).

At the end of December, UnitedHealthcare (along with some other carriers) complained about CMS publicly posting their proposed rate increases:

“While we fully support increased transparency, we believe that making all rate increases public, including those not subject to rate review, would result in unnecessary consumer confusion,” wrote Kristin Lewis, vice president of government affairs and public policy at Tufts Health Plan, an insurer based in Watertown, Mass.

“The availability of this competitive information may encourage irrational pricing, which can harm consumers and creates market instability,” added UnitedHealthcare's Johnson.

Then, in January, UnitedHealthcare was at it again, this time complaining about the ACA's Risk Adjustment program:

UnitedHealth Group Inc. (NYSE:UNH), the largest U.S. health insurer, said its rates for public exchange plans in New York state may be too low because the failure of a competing insurer last year might lead to shortfalls in payments to the state's risk-adjustment program.

Drafters of the Patient Protection and Affordable Care Act (PPACA) created the risk-adjustment program in an effort to stabilize the exchange markets, by having insurers with enrollees with low health risk scores send payments to insurers with enrollees with high risk scores.

UnitedHealth set its rates for New York state based on the assumption that the risk-adjustment program would help stabilize the market, William Golden, the company’s Northeast region chief executive officer, said Wednesday at a state Senate round table in Albany.

If the loss of a participant reduces the funds available to UnitedHealth through the risk-adjustment program, the company’s rates in New York’s PPACA market may be insufficient, Golden said.

Once again, UHC seemed to be the only ones complaining (or at least were complaining the loudest). I noted at the time:

@lhpro_health @ZTracer I know very little about the RA program & am obviously biased here, but it really seems to me…

— Charles Gaba (@charles_gaba) January 7, 2016

@lhpro_health @ztracer …that UH does nothing but whine. I mean, I don’t hear Aetna, BCBSA, Kaiser, etc. griping about everything like UH…

— Charles Gaba (@charles_gaba) January 7, 2016

I found all of these complaints by UnitedHealthcare to be a bit curious, especially given that, while it's true that many private carriers did lose money on the ACA exchanges in 2014 (and again in 2015), not all of them did; some carriers made a profit both years. That's kind of the whole idea behind a competitive free market system: Some companies will win, others will lose, even with "safety nets" in place to cushion the blow such as the Risk Adjustment and Risk Corridor programs.

Well, it seems I'm not the only one who feels that way; as Richard Mayhew notes, the Urban Institute just put out a report which comes to pretty much the same conclusion. As Mayhew summarizes (read his whole piece, though):

United Healthcare is losing money because they did not think their strategy through. Sucks to be them but this is not a systemic Exchange problem.

Chad Terhune of the L.A. Times also reports that Covered California executive director Peter Lee is tearing UnitedHealthcare apart, essentially saying the same thing: Quit 'yer bitching & moaning and take responsibility for your own actions:

Amid growing questions over the future of Obamacare exchanges, the head of California's marketplace said the nation's largest private health insurer should take responsibility for nearly $1 billion in losses and stop blaming the federal health law.

In a blistering critique, Covered California's executive director, Peter Lee, said UnitedHealth Group Inc. made a series of blunders on rates and networks that led to a $475 million loss in 2015 on individual policies across the country. The company estimates a similar exchange-related loss of $500 million in 2016.

"Instead of saying, 'We screwed up,' they said, 'Obamacare is the problem and we may not play anymore,' " Lee said in an interview with California Healthline. "It was giving an excuse to Wall Street and throwing the Affordable Care Act under the bus."

Lee, a staunch defender of the health law and a former official in the Obama administration, has tangled with UnitedHealth in the past. He knocked the company for sitting out the launch of Obamacare in 2014, then welcomed UnitedHealth into Covered California for 2016.

But now, he said, the company is "driving me bonkers" because it has "fed this political frenzy that Obamacare doesn't work. It's total spin and unanchored in reality."