UnitedHealth Group (UNH) Chief Executive Officer Steven Hemsley said on Tuesday that the company would largely exit the Obamacare exchange market in 2017, following through on a warning he had given late last year that costs appeared to be unsustainable.
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Hemsley, in prepared remarks made as part of the company's first-quarter earnings report, said that after a state-by-state review, it had found that the smaller overall market size and shorter term, higher risk profile suggested it could not offer plans on a sustained basis. UnitedHealth sells these individual insurance plans, created as part of President Barack Obama's national healthcare law, in 34 states this year.
Separately, the insuer raised its expectations for 2016 profit, in part because of a more favorable tax rate that also helped it beat Wall Street expectations for the first quarter.Lower sales and administrative costs and a lower amortization of intangible assets also helped its first quarter profit rise about 9 cents more than analysts expected.