UnitedHealth Quitting Obamacare Markets in Georgia, Arkansas
Zachary Tracer
April 8, 2016 - Bloomberg
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Insurers finding it difficult to
profit from exchanges
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UnitedHealth warned last year that it
might exit states
UnitedHealth Group Inc., the largest U.S. health insurer, has decided to call
it quits in two state Obamacare markets, in the latest challenge to President
Barack Obamafs health-care overhaul.
The insurer wonft sell plans for next year in Georgia and Arkansas, according
to state insurance regulators. Tyler Mason, a UnitedHealth spokesman, confirmed
the exits and declined to say whether the company would drop out of additional
states.
Many insurers have found it difficult to turn a profit in the new markets
created by the Affordable Care Act, where individuals turned out to be more
costly to care for than the companies expected. UnitedHealth and Aetna Inc. both
posted losses from the policies last year, as did big Blue Cross and Blue Shield
plans in states like North Carolina.
UnitedHealth began warning in November that it might exit Obamacare markets
as it racked up losses. In December, the company said it
should have stayed out of the
individual exchanges longer.
Leaving some state exchanges could help UnitedHealth boost its profits next
year, Ana Gupte, an analyst at Leerink Partners, said Friday in a research
note.
gExits from unprofitable markets will act as a tailwind to earnings,h Gupte
wrote. gWe have more conviction in our view that there is upsideh to
UnitedHealthfs earnings estimates.
Fewer Options
The ACA relies on private health-insurance companies to offer policies that
individuals can buy in government-run markets. About 58 percent of consumers had
fewer options in 2016 than the year before, while 31 percent had more choices,
McKinsey & Co.
found.
UnitedHealthfs decision to stop offering ACA plans next year means that
people who are currently enrolled with the insurer will have to choose a new
health insurance provider next year. It doesnft affect their current
coverage.
gAs with any new market, we expect changes and adjustments in the early years
with issuers both entering and exiting states,h Aaron Albright, a spokesman
for the Centers for Medicare and Medicaid Services, said in an e-mail. gThe
marketplace is a reliable source of coverage for millions of Americans with a
robust number of plan choices.h
Biggest Carrier
While UnitedHealth is the biggest carrier in the U.S., with about 42 million
medical customers, it has a smaller role in the ACAfs markets. The company had
about 650,000 in individual exchange-compliant policies as of Dec. 31.
About 12.7 million people signed up for Obamacare coverage for this year,
including about 587,800 in Georgia and 73,600 in Arkansas, according to CMS. The
agency doesnft disclose what insurers people picked.
In Arkansas, 544 people were enrolled in UnitedHealth Obamacare plans,
according to Kenneth Ryan James, a spokesman for the state insurance department.
He said Blue Cross and Blue Shield plans are dominant in the state.
UnitedHealth had another 5,923 members enrolled in private Medicaid policies
tied to the ACA in Arkansas, James said. UnitedHealth is also exiting that
business. The Arkansas Democrat-Gazette earlier reported UnitedHealthfs decision
in that state.
Including UnitedHealth, Georgia has nine health insurers that currently offer
ACA polices, according to Glenn Allen, a spokesman for the statefs insurance
commissioner. Others include Aetna, Humana Inc. and Cigna Corp. No other company
has yet told Georgia that itfs exiting, and companies have until May 11 to
decide, he said.