UnitedHealth Group significantly reduced its earnings projections for 2015 in large part because of a “continuing deterioration” in plans it offers on the health insurance exchanges created by the Patient Protection and Affordable Care Act (ACA).

For the fourth quarter, UnitedHealth expects a $425 million reduction in earnings, including $275 million related to 2016 losses. The company announced the revised guidance on Nov. 19 and noted that, other than the exchange products, the “remainder of the business continues to perform in line with expectations.”

“In recent weeks, growth expectations for individual exchange participation have tempered industrywide, 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,” UnitedHealth Group CEO Stephen J. Hemsley said in a news release. “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.” 

UnitedHealth also announced it would reduce marketing efforts underway for enrollment in exchanges in 2016. In addition, the company said it was “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.”

The announcement was surprising considering United Health CFO David Wichmann told analysts on Oct. 15 that, “I think we’ll see strikingly better performance on the insurance exchange business” next year, according to Bloomberg.

Enrollment for 2016 plans on the health insurance exchanges began on Nov. 1 and runs through Jan. 31. As of Nov. 18, more than one million people had submitted an application for coverage and selected a health plan.

This is the third year individuals can purchase insurance through the exchanges. By the end of this year, the U.S. Department of Health and Human Services expects 9.1 million people to have purchased coverage through the exchanges. That number is expected to increase to 10 million by the end of 2016.

The health insurance exchanges were created to expand coverage to people who did not previously have insurance. Some people with low incomes receive tax credits to help offset the costs of insurance.

As part of the ACA, most Americans are required to have insurance or pay a tax. For 2016, the penalty is the greater of $695 per adult or 2 percent of family income, an increase of $325 per adults and 2 percent of family income this year.