UnitedHealth Group, the country's largest private health insurer, has discovered that sick people tend to go to the doctor. And that means bills to pay. And that's bad for the company's bottom line.
So UnitedHealth said Thursday that because of the "continuing deterioration" of its profits from Obamacare, it may quit offering coverage through the system by 2017.
In its next breath, UnitedHealth stressed that it "remains a strong supporter of sustainable efforts to ensure access to affordable, quality care for all Americans."
But, well, business is business. The company's concerned that it might not see the same $1.6 billion in profit that it pocketed in the third quarter.
Supporters of healthcare reform will view UnitedHealth's warning as further proof that for-profit companies shouldn't be making money off the sick. Critics will see evidence of Obamacare's failed promise of fixing a broken healthcare system.
They're both right. The bigger issue, however, is what we're going to do about it.
"We should be worried," said Dana Goldman, director of the USC Schaeffer Center for Health Policy and Economics. "The long-term sustainability of the Affordable Care Act requires a functioning market with lots of players.
"If this is what the largest insurer is thinking, other insurers are probably thinking the same," he said. "If the number of players shrinks, it will be a less functional market."
Gerald Friedman, a healthcare economist at the University of Massachusetts Amherst, said no one should be surprised by a major health insurer threatening to take its ball and go home.
"They're a for-profit company," he said. "That's capitalism."
True. UnitedHealth's chief executive, Stephen J. Hemsley, has a fiduciary duty to deliver consistently solid results to the company's shareholders. There's a reason he received total compensation valued at more than $66 million last year.
The problem, as Friedman and others said, is that many of the first people to sign up for Obamacare coverage were those with preexisting medical conditions who had been denied coverage in the past. They wasted no time seeking treatment.
"UnitedHealth is still making a lot of money, just not as much as they thought," Friedman said. "So they need to signal their shareholders that they take this seriously."
Will the company really quit the individual insurance market? Most experts I spoke with said this would be unlikely.
"They're probably just sending a message," said Timothy McBride, a healthcare economist at Washington University in St. Louis. "They may be saying that to stay, they want to see higher premiums."
If so, people buying insurance on Obamacare exchanges can look forward to paying more for coverage and being able to afford only policies with huge deductibles.
That would be good for insurers and bad for patients, and it would represent yet another roadblock to creating a system that guarantees everyone access to affordable medical care.
What to do? That's where things get tough — as the long, bumpy road to passage of the Affordable Care Act in 2010 made clear. With about $3 trillion in annual healthcare spending at stake, this is a pot stirred by lots and lots of chefs.
USC's Goldman had one suggestion: Rather than having people sign up for coverage under Obamacare on a yearly basis, extend contracts to two or three years. This would help even out insurers' returns by raising the likelihood of fewer claims once immediate health issues have been addressed.
Stuart Altman, a professor of national health policy at Brandeis University, said perhaps the sickest Americans should be broken off into a separate high-risk pool and receive coverage from the government. "In the individual market, the risks are just too great," he said.
This would shield private insurers from the biggest claims. But it would stick taxpayers with the cost.
Friedman at the University of Massachusetts said a partial step toward addressing that problem would be lowing the eligibility age for Medicare, thus spreading the risk among millions of program beneficiaries.
But why stop there? Nearly every expert I spoke with said the only cost-effective way of covering an entire population is to do what the rest of the developed world does — offer a single-payer system that can serve as the foundation of people's insurance options.
"If you think that healthcare is a right, single payer becomes the most direct solution," said Frank A. Sloan, a professor of health policy and economics at Duke University.
"Unfortunately," he said, "the American people have been told this is socialized medicine, and we don't like socialism."
It's not socialized medicine. Nobody's talking about government-controlled medical care. Single-payer insurance is simply a way of managing risk and providing stable financing of treatment.
It's also a smart way of relieving corporations of the burden of insuring employees, which would improve their global competitiveness.
Asked about the chances of a single-payer system in this country, most of the experts said, "Not in my lifetime." The political and the ideological barriers are just too high.
Instead we have UnitedHealth throwing what Princeton University economist Uwe Reinhardt called "a tantrum" when confronted with the possibility of not cleaning up at the Obamacare craps table.
"Of all the conceivable ways to finance healthcare," he told me, "Americans have found the dumbest way to do it."
That, it appears, won't change any time soon.
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