UnitedHealth warned on Thursday that it would earn more than $425 million less revenue during its fourth quarter than it had expected previously which is equal to 26 cents per share in earnings. A Goldman Sachs Group Inc. analysis of state filings for 30 not-for-profit Blue Cross and Blue Shield insurers found that their overall company wide results were "barely break-even" for the first half of 2015.
The company also cut its 2015 earnings forecast. Even the NY Times has noted the relationship between insurers and the Administration has evolved "into a powerful, mutually beneficial partnership that has been a boon to the nation's largest private health plans".
Anthem Inc. and Aetna Inc., the two biggest health insurers after UnitedHealth, also declined, as did hospital stocks including HCA Holdings Inc. and Community Health Systems Inc.
It will evaluate during the first half of next year whether it will offer Obamacare plans in 2017. Several of Obama's fellow Democrats are also considering changes to the Affordable Care Act, including whether to alter the "Cadillac tax", a levy on high-cost health plans sponsored by employers. He says investors would likely cheer if the company abandoned exchanges altogether.
"There's still a lot of demand [from customers] in this market", she said. "That's the lesson here".
The exchanges also aren't on the verge of collapse either. About 9.9 million people had insurance through the US- and state-run insurance markets as of June 30.
For UnitedHealth, it marks a dramatic shift after the Minneapolis company said last month that it was expanding into 11 more exchanges next year.
"They must have such bad claims experience that they now doubt they can ever turn a profit", said Brian Blase, a health policy expert at George Mason University's Mercatus Center.
On Thursday, federal officials issued a statement expressing their commitment to pay the amount owed the insurers.
This shocking announcement from UnitedHealth stunned many and analysts fear the ramifications will ripple through the broader marketplace. And, the shares of other large commercial health insurers - Aetna, Humana, and Anthem - also fell by between 4 percent and 7 percent.
While the company's announcement may sound like sour grapes to a few, it highlights what the industry considers a major problem. It had been a reluctant participant, staying largely on the sidelines in 2014.
For naysayers of the Affordable Care Act, the fall may be providing them with a "told you so" moment. "They came late to the party, and their enrollment is still relatively modest".
"Choice is part of our mission", he said.
"Today's statement by one issuer is not indicative of the marketplace's strength and viability", he said. The company said the earnings revision was due to "projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years".
"We cannot sustain these losses", UnitedHealth CEO Stephen Hemsley said on an investor call Thursday. "We can't subsidize a market that doesn't appear at this point to be sustaining itself". The company had raised that forecast twice so far this year before reaffirming it last month.