This Obamacare News Is One of the Law's Worst Omens to Date

UnitedHealth Group Inc. (NYSE: UNH) CEO Stephen J. Hemsley unleashed a bombshell of Obamacare news when he announced that his firm is considering a 2017 exit from the exchanges created by the Affordable Care Act (ACA).

"We are evaluating the viability of the insurance exchange product category for us and will determine during the first half of 2016 the extent to which we can continue to serve the public exchange markets in 2017," Hemsley said in a Thursday morning conference call. UnitedHealth added that it would cut back on the marketing of its ACA plans.

UnitedHealth is the largest health insurer in the United States. For 2016, it offers Obamacare plans in 35 states and serves half a million customers.

In revising its 2015 earnings outlook downward from $6.25-$6.35 to $6.00, UnitedHealth blamed "pressure" of $425 million, or $0.26 a share, on losses from its Obamacare-related business.

"We cannot sustain these losses," Hemsley told analysts on a conference call. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."

This devastating Obamacare news confirmed suspicion that the major insurers aren't doing well with their ACA plans and eventually could follow UnitedHealth's lead in abandoning the exchanges.

"Every single one of the companies involved in this is going to have to do exactly what UNH did," said CNBC commentator Jim Cramer. "This is very damning for [the Affordable Care Act]."

UnitedHealth fell 5.6% Thursday and dragged down much of the health insurance sector with it. Cigna Corp. (NYSE: CI) dropped 5.4%, Anthem Inc. (NYSE: ANTM) fell 6.9%, and Aetna Inc. (NYSE: AET) lost 6.5%. Hospitals felt the pain as well, with Tenet Healthcare Corp. (NYSE: THC) shedding 8% and HCA Holdings Inc. (NYSE: HCA) falling 6.9%.

So what the heck is going on?

Frankly, it's something the ACA's critics have long predicted…

David Zeiler

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Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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