UnitedHealth Group will not sell policies next year in most of the health insurance marketplaces created by the Affordable Care Act, CEO Stephen Helmsley announced during an April 19 earnings call.
“Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017,” Mr. Helmsley said, citing the company’s inability to offset the “shorter-term, higher-risk” population covered by the ACA exchange plans with large enough risk pools.
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Mr. Helmsley did not say in which state marketplaces UnitedHealth Group (UHG) will continue to offer coverage.
Areas that could be hardest hit by the UHG withdrawal include Alabama, Arizona, Arkansas, Nebraska, North Carolina, and Tennessee, according to an analysis from the Kaiser Family Foundation.
For now, the decision by UHG is not likely to impact the average benchmark premium by more than a 1% increase, according to the analysis. That’s because the insurer was less likely than its competitors to offer lower-cost silver plans; when silver plans were offered, they were offered at or very near to the competitors’ prices. However, in states where the withdrawal of UHG means that two or fewer insurers are participating in the marketplace, benchmark premiums could rise substantially, according to the study.
The long-term effect of the UHG exit from most marketplaces is not clear, according to Kaiser’s analysts. “In areas with limited insurer participation, the remaining plans after a United exit may have more market power relative to providers, but in the absence of insurer competition, those savings may not be passed along to consumers,” they wrote.
ACA measures such as rate reviews and medical loss ratio provisions could mitigate adverse effects on consumers in these markets, giving regulators the power to force insurers to issue rebates if premiums outstrip the cost of care.
The insurer’s decision is simply evidence that typical market forces are in play, according to Jonathan Gold, a spokesperson for the Centers for Medicare & Medicaid Services.
“As with any new market, we expect changes and adjustments in the early years with issuers both entering and exiting states,” Mr. Gold said in an interview. The UHG decision was not unexpected, as company officials said they were contemplating the move last November.
“We have full confidence, based on data, that the marketplaces will continue to thrive for years ahead,” he said, noting that in 2016, 39 insurers exited the marketplace, while 40 entered.
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