Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Why is UnitedHealthcare thinking of bailing on Obamacare?

Brian C. Joondeph, MD
Policy
December 7, 2015
241 Shares
Share
Tweet
Share

UnitedHealthcare (UHC), the nation’s largest health insurer, will likely pull out of Obamacare in 2017. Citing high costs and huge potential losses, they warned that 2016 will probably be their last year offering health insurance through the Obamacare exchanges.

Is this another example of greedy insurance companies with fat cat CEOs gouging the system? Or are economic realities interfering with the “hope and change” of Obamacare?

UHC isn’t really selling insurance. Instead they sell something much different, “prepaid health care.” Insurance looks forward at the probability of a costly event, such as getting sick or injured, occurring at some future point. Based on the probability of such an event, a cost is calculated which a person can pay, as an insurance premium, to mitigate the future financial risk. For insurance to work, a large group of people must pay into the system, so there are sufficient funds to pay for the medical care of the few who need it.

Obamacare, on the other hand, looks backward at costly events that have already occurred. An example of this is the coverage of expensive preexisting diseases such as diabetes or cancer. Patients with these conditions pay the same premiums as someone who is healthy, and this turns the risk-premium calculation on its head.

Imagine not having to purchase homeowner’s insurance until your home is already on fire. That is how Obamacare works. Individuals can save money by not purchasing insurance until they are sick or injured and actually need it. UHC, or any other insurance carrier, is required to sell this person insurance at the same price as if they were healthy. After racking up huge medical bills that UHC must pay, the individual can cancel their policy until they need it again in the future.

What if we could forgo home insurance until our house is flooded or a tree falls through the roof, then pay premiums for several months while the insurance company rebuilds our home, after which we cancel the policy? How long would these insurance companies stay in business?

This is what UHC is up against. The young and healthy, if given a choice between their iPhone data plan, Netflix, and Amazon Prime versus purchasing health insurance they will not likely need, choose the goodies. Who then does purchase health insurance? Those already sick, needing expensive treatments and medications. With state limits on premiums, insurance companies are stuck paying the bills for the costliest patients without any premium support from the healthy who have no medical bills.

This is great for those with preexisting conditions, but not so good for the insurance companies paying the bills.

Health care insurance is the only type of insurance operating in this way, devoid of economic reality. Bad drivers cost more and will pay higher premiums as a result. Smokers are more likely to die prematurely or suffer illness, and, as a result, their life and disability insurance premiums will be higher. Not so in health care.

UHC is simply reacting to the economic rules of the game that they are forced to play by. When the deck is stacked against them, they can continue to play and lose money, or else quit the game. No surprise that they are choosing the latter course.

Brian C. Joondeph is an ophthalmologist and can be reached on Twitter @retinaldoctor. This article originally appeared on the Independent Journal.

Prev

Survival of the fittest in the ER

December 7, 2015 Kevin 1
…
Next

Tell Uncle Sam to go easy on older doctors

December 7, 2015 Kevin 10
…

Tagged as: Public Health & Policy

Post navigation

< Previous Post
Survival of the fittest in the ER
Next Post >
Tell Uncle Sam to go easy on older doctors

More by Brian C. Joondeph, MD

  • Ophthalmology in the era of COVID-19

    Brian C. Joondeph, MD
  • An ophthalmologist analyzes Joe Biden’s red eye

    Brian C. Joondeph, MD
  • When medical science becomes fake news

    Brian C. Joondeph, MD

Related Posts

  • Supporters of Obamacare should consider this Trump proposal

    Robert Laszewski
  • Why do people hate Obamacare?

    Julie Rovner
  • So much for repealing and replacing Obamacare. What’s next?

    Brian C. Joondeph, MD
  • Obamacare prices are rising. But not for the reasons you think.

    Peter Ubel, MD
  • Here’s why health insurance is different from other insurance

    Joseph Crisp
  • Understanding consent-to-settle in your malpractice insurance policy

    Jennifer Wiggins

More in Policy

  • The realities of immigrant health care served hot from America’s melting pot

    Stella Cho
  • Healing the damaged nurse-physician dynamic

    Angel J. Mena, MD and Ali Morin, MSN, RN
  • Deaths of despair: an urgent call for a collective response to the crisis in U.S. life expectancy

    Mohammed Umer Waris, MD
  • Breaking down the barriers to effective bar-code medication administration

    Amy Dang Craft
  • The locums industry has a beef problem

    Aaron Morgenstein, MD
  • Canada’s health workers are sounding the alarm. We must act, now.

    Ivy Lynn Bourgeault, PhD
  • Most Popular

  • Past Week

    • It’s time for C-suite to contract directly with physicians for part-time work

      Aaron Morgenstein, MD & Corinne Sundar Rao, MD | Physician
    • What is driving physicians to the edge of despair?

      Edward T. Creagan, MD | Physician
    • The untold struggles patients face with resident doctors

      Denise Reich | Conditions
    • The psychoanalytic hammer: lessons in listening and patient-centered care

      Greg Smith, MD | Conditions
    • Physicians are a finite resource we need to protect

      Jack Resneck, Jr., MD | Physician
    • Revolutionizing COPD management with virtual care solutions [PODCAST]

      The Podcast by KevinMD | Podcast
  • Past 6 Months

    • The real cause of America’s opioid crisis: Doctors are not to blame

      Richard A. Lawhern, PhD | Meds
    • The fight for reproductive health: Why medication abortion matters

      Catherine Hennessey, MD | Physician
    • The vital importance of climate change education in medical schools

      Helen Kim, MD | Policy
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • It’s time for C-suite to contract directly with physicians for part-time work

      Aaron Morgenstein, MD & Corinne Sundar Rao, MD | Physician
    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
  • Recent Posts

    • Physicians are a finite resource we need to protect

      Jack Resneck, Jr., MD | Physician
    • From clocking in to clocking out: the transition to retirement

      Debbie Moore-Black, RN | Conditions
    • Breaking free from a toxic relationship with medicine [PODCAST]

      The Podcast by KevinMD | Podcast
    • Tom Brady’s legacy and the importance of personal integrity in end-of-life choices

      Kevin Haselhorst, MD | Physician
    • The hidden truths of hospital life: What doctors wish you knew

      Emily Stanford, DO | Physician
    • 10 commandments of ethical affiliate marketing for physicians

      Aaron Morgenstein, MD & Amy Bissada, DO | Finance

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 99 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • Journal Shows Its Commitment to Exploring AI in Medicine
  • Do Away With 'Lockout' Period in iPLEDGE, FDA Advisors Urge
  • Cluster Headache, Migraine Linked to Circadian System
  • Smaller Liver Transplant Candidates Wait Longer, Less Likely to Receive Organ
  • A 'Double Whammy' for Gastric Cancer Risk

Meeting Coverage

  • Oral Roflumilast Effective in the Treatment of Plaque Psoriasis
  • Phase III Trials 'Hit a Home Run' in Advanced Endometrial Cancer
  • Cannabis Use Common in Post-Surgery Patients on Opioid Tapering
  • Less Abuse With Extended-Release Oxycodone, Poison Center Data Suggest
  • Novel Strategies Show Winning Potential in Ovarian Cancer
  • Most Popular

  • Past Week

    • It’s time for C-suite to contract directly with physicians for part-time work

      Aaron Morgenstein, MD & Corinne Sundar Rao, MD | Physician
    • What is driving physicians to the edge of despair?

      Edward T. Creagan, MD | Physician
    • The untold struggles patients face with resident doctors

      Denise Reich | Conditions
    • The psychoanalytic hammer: lessons in listening and patient-centered care

      Greg Smith, MD | Conditions
    • Physicians are a finite resource we need to protect

      Jack Resneck, Jr., MD | Physician
    • Revolutionizing COPD management with virtual care solutions [PODCAST]

      The Podcast by KevinMD | Podcast
  • Past 6 Months

    • The real cause of America’s opioid crisis: Doctors are not to blame

      Richard A. Lawhern, PhD | Meds
    • The fight for reproductive health: Why medication abortion matters

      Catherine Hennessey, MD | Physician
    • The vital importance of climate change education in medical schools

      Helen Kim, MD | Policy
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • It’s time for C-suite to contract directly with physicians for part-time work

      Aaron Morgenstein, MD & Corinne Sundar Rao, MD | Physician
    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
  • Recent Posts

    • Physicians are a finite resource we need to protect

      Jack Resneck, Jr., MD | Physician
    • From clocking in to clocking out: the transition to retirement

      Debbie Moore-Black, RN | Conditions
    • Breaking free from a toxic relationship with medicine [PODCAST]

      The Podcast by KevinMD | Podcast
    • Tom Brady’s legacy and the importance of personal integrity in end-of-life choices

      Kevin Haselhorst, MD | Physician
    • The hidden truths of hospital life: What doctors wish you knew

      Emily Stanford, DO | Physician
    • 10 commandments of ethical affiliate marketing for physicians

      Aaron Morgenstein, MD & Amy Bissada, DO | Finance

MedPage Today Professional

An Everyday Health Property Medpage Today iMedicalApps
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Why is UnitedHealthcare thinking of bailing on Obamacare?
99 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...