UnitedHealthcare Group’s quarterly profit skyrocketed after the insurance provider drastically downsized its participation in the Obamacare exchanges.
The company’s profit rose by 35 percent in the first-quarter of 2017, and expanded nearly every aspect of its operation, including its participation in Medicare Advantage and Medicaid plans, The Associated Press reports. In total, UnitedHealth brought in $2.17 billion in first-quarter earnings, with $48.72 billion in revenue. Shares of UnitedHealth are up 1.08 percent as of 2:12 p.m. Tuesday afternoon.
UnitedHealth’s operating income also rose outside of its health insurance offerings. The company experienced a 16 percent bump in operating earnings from Optum, another facet of UnitedHealth. Optum provides it with pharmacy benefits management and technological capabilities, as well as a network of doctor and clinical offices.
Following what amounted to a $475 million loss from participating in the exchanges in 2015, UnitedHealth announced in April 2016, that it would back out of all but a “handful” in 2017. The group expected to lose as much as $800 million in 2016.
“The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” UnitedHealthcare Group CEO Stephen Hemsley told reporters in 2016. “Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017.”
UnitedHealth is not alone. Insurance providers Aetna and Humana are also leaving the exchanges.
Aetna announced in August 2016, that it would stop offering plans on 11 of the 15 Obamacare exchanges where it currently operates. The company reports losing $430 billion through participating in exchanges since 2014.
Humana became the first insurance provider to completely opt out altogether in February, announcing it would no longer offer health insurance plans on state exchanges in 2018.
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