Citing Losses, UnitedHealth Will Exit Most State Insurance Exchanges Next Year

The UnitedHealth Group, one of the nation’s largest health insurers, told investors on Tuesday that it continued to lose hundreds of millions of dollars selling individual policies under the federal health care law. The company said it planned to pull out of a majority of states where it offered coverage and would offer policies on the public exchanges in “only a handful of states” for 2017.

UnitedHealth, which was a late and seemingly reluctant participant in the public exchanges, surprised investors last year when it announced its sizable losses, now estimated at more than a combined $1 billion for 2015 and 2016, because of its poor performance in the public exchanges. Policy analysts have been watching UnitedHealth closely as an indicator of whether the new individual market developed under the Affordable Care Act is sustainable.

Addressing investors, Stephen J. Hemsley, the company’s chief executive, continued to offer a pessimistic view. “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 sustainable basis,” he said. UnitedHealth estimated its losses from the exchanges would be $650 million this year.

UnitedHealth reported overall earnings from operations of $3 billion on revenue of $44.5 billion for the first quarter of 2016, compared with earnings of $2.6 billion on revenue of $35.8 billion for the 2015 quarter.

The company would not specify which states it planned to exit. It appears to be staying in Virginia and Nevada next year, but it is not known what other states remain attractive. A small unit of UnitedHealth, which offers exchange plans that feature a primary care clinic, is being tested in some states, including Georgia, where United says it is pulling out.