UnitedHealth Group may exit the insurance exchange market, as the deterioration in product performance has weakened its financial outlook, the company said in an earnings update released Thursday.
UnitedHealth has already pulled back on its marketing efforts for individual exchange products in 2016, it said.
"The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017," UnitedHealth said.
UnitedHealth also cut its earnings outlook on its weak view of the exchange plan business.
"In recent weeks, growth expectations for individual exchange participation have tempered industry-wide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step," CEO Stephen J. Hemsley said in the report.
Hemsley was referring to nonprofit co-ops established by the Affordable Care Act that are losing money; four have closed due to financial insolvency.
In the most recent case, federal and state officials ordered Health Republic Insurance of New York to close by Nov. 30 after it was revealed that it owed hospitals an estimated $150 million in receivables.
UnitedHealth Group's revised 2015 net earnings outlook of approximately $6 per share reflects expected pre-tax earnings pressure of $425 million or $0.26 per share, including $275 million related to the advance recognition of 2016 losses.
The earnings pressure is driven by projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years, the company said.
The remainder of the business continues to perform in line with expectations, it said. UnitedHealth said it saw growth in all other benefit market segments.
UnitedHealth Group said it would provide more detail on its outlook at its investor conference on December 1.
"We continue to be pleased with the growth and overall performance of our company outside of the individual exchange products and look forward to strong, positive and broad- based earnings growth across our enterprise in 2016," it said.
UnitedHealth, one of the nation's biggest insurers, said it remains a strong supporter of sustainable efforts to ensure access to affordable, quality care and has advocated for this publicly for more than 20 years, including as one of the first businesses to focus on serving people through managed Medicaid and Medicare.
As the Affordable Care Act aims to enroll 10 million people in President Barack Obama's signature health law by the end of 2016, insurers have been signaling trouble with its financial viability by offering limited plan choices and raising premiums to cover the medical costs of enrollees who have been sicker than than projected.
High premiums could discourage younger, healthier people from enrolling.
A Goldman Sachs Group 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, according to The Wall Street Journal.