The Affordable Care Act, better known as Obamacare, is still taking a serious chunk out of UnitedHealthcare’s profits, according to its CFO, but at least it’s not getting any worse.
In the company’s earnings call on Tuesday, Dan Schumacher, CFO of the main UnitedHealthcare division, said the firm is still losing money on the ACA business but those losses have not accelerated.
In the second quarter, UnitedHealth increased its loss projections for 2016 by $200 million.
“When you look at the performance inside the quarter, I would tell you that, as you pointed out, nothing’s really changed on the ACA front and that’s a good thing,” said Schumacher. “Our third quarter was very much in line with our revised expectations that we set coming out of the second quarter and we’ve continued to maintain our full-year view, to be more specific about it.”
Schumacher said the firm lost around $200 million from its exchange business, but that was in line with its expectations for the quarter and the full year.
UnitedHealth — along with other large insurers like Aetna and Humana — have been losing more and more money through the exchanges. This is in part due to higher than expected costs for large insurers on the exchanges, but also because the pool of those getting insurance through the exchanges has been older, sicker, and more expensive than originally thought.
Besides providing the business update, UnitedHealth Group CEO Stephen Hemsley said that the company did not want to address the current state of Obamacare since a new administration will be taking over the White House soon.
“I think commenting beyond that, particularly as a new administration takes hold and so forth, our posture is to be very constructive about making the marketplace work most effectively and serving the most number of individuals and making that system simpler and more usable for everybody,” said Hemsley.
“So I think beyond commenting on that level I don’t think we are going to get into what’s going to happen going forward, on either a state basis or federal.”
He did, however, say that Medicaid expansion has been “a very significant success of the ACA” and states that accepted the expansion have seen their exchanges become “more stable and better performing.”
Following stronger than expected earnings, UnitedHealth is trading higher on Tuesday at $143.49, just over a 7% jump.