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UnitedHealth leaving all but a 'handful' of public health insurance exchanges

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Citing poor enrollment and high-risk customers, UnitedHealth Group Inc. said Tuesday that it will exit the public health insurance exchange market next year except for just a “handful of states,” despite reporting a strong overall first-quarter performance.

“The smaller overall market size and shorter-term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis. Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017,” UnitedHealth CEO Stephen Hemsley said during a conference call Tuesday with investment analysts.

Mr. Hemsley did not delineate the states in which UnitedHealth would remain in public exchanges next year.

In an email, a company spokesman declined to elaborate “out of respect for our state partners.”

The Minnetonka, Minnesota-based health insurer also said it expects to lose $650 million for all of 2016 on its business in the public health insurance exchanges established by the Affordable Care Act. That's up from its previous estimate of $525 million.

Last year, the insurer lost $475 million on the exchanges.

Double-digit net income rise

Despite losses in its public exchange business, UnitedHealth recorded net income of $1.63 million billion for the first quarter this year, up 15.1% from the same quarter last year.

Growth in net income was driven primarily by strong organic growth and customer retention, Mr. Hemsley said during the conference call.

He added that the health insurer is looking forward to what “may become our best decade of performance and growth yet.”

First-quarter revenue jumped 24.5%to $44.53 billion year-over-year, while premiums grew 9.9% to $34.81 billion compared with the same quarter the year before.

Unit Optum Inc.'s revenue surged 53.6% over first-quarter 2015, rising to $19.68 billion.

UnitedHealthcare posted total medical membership of 47.7 million, up from 45.8 million the same quarter a year before.