UnitedHealth Group to exit Obamacare exchanges in all but a ehandfulf of states
By Carolyn Y. Johnson
April 19 at 9:46 AM - The Washington Post
UnitedHealth Group, the nation's largest health insurer, said
Tuesday that in 2017 it will exit most of the 34 states where it
offers plans on the Affordable Care Act insurance exchanges.
"We will be down to a handful of states that we will be actively
participating in the exchanges," Stephen J. Hemsley, chief executive
officer of UnitedHealth Group said in an earnings call, noting that the
small market size and greater expense of patients insured through the
marketplaces led the insurer to make the decision.
UnitedHealth plans to withdraw from health insurance marketplaces in Arkansas, Michigan, Connecticut and parts of Georgia. The decision is a sequel to an
announcement by executives late last year that the insurer had suffered
financial losses and might leave the health exchanges altogether in 2017.
UnitedHealth reported that it expects to lose $650 million in the
exchanges in 2016.
Prior to the call, the Obama Administration attempted to downplay any
departures from UnitedHealth.
"We have full confidence, based on data, that the Marketplaces will continue
to thrive for years ahead. The number of issuers per state has grown
year-over-year," Health and Human Services spokesman Ben Wakana said in a
statement released Monday morning. "The Marketplace should be judged by the
choices it offers consumers, not the decisions of any one issuer."
Although UnitedHealth is the nation's biggest health insurer, it was
slow to enter the exchanges in 2014, rolling out plans in just four states
initially. In the call, executives said they cover 795,000 people through the
exchanges and expect that number to drop to 650,000 by December. There are 12.7
million people insured through the state and federal marketplaces, according to
the latest data.
Several observers said that while the decision is a clear signal of the
troubles insurers face in making money in the marketplaces, it doesn't mean that
other companies will follow suit.
"This is an industry problem. A lot of them [insurers] are losing money
in a number of states," said Ana Gupte, a senior analyst in healthcare services
at Leerink Partners.
However, she added, "I think United will probably be the most bold, in terms
of the exits," partially because only a small portion of the company's revenue
comes from the marketplaces relative to other insurers, such as Aetna or Anthem,
which would find it more difficult to walk away.
The true impact of UnitedHealth's departure will vary by location,
according to a new report by the Kaiser
Family Foundation. That analysis found that, if United were to drop out of
all the states, 1.1 million people in the exchanges would have just one
option for an insurer, provided no other insurers rushed in to fill the
gap.
State-by-state, the impact could be significant in some rural areas and
Southern states, the Kaiser analysis found. But the report also showed that,
overall, the effects would be relatively modest. Even if United exited all
states, most marketplace enrollees would still have the ability to choose
between three or more insurers. An average health plan used as a benchmark
would be about 1 percent more expensive if United had not participated in
2016.
"I donft know what a 'handful' means, but it does sound like a pretty big
pullout. But since we donft know which markets it is -- we know some of them but
we donft know many of the others -- we donft know how big a deal it is in terms
of competition," said Gary Claxton, a vice president at the Kaiser Family
Foundation.
United's announcement comes as other insurers have indicated concern
over how they are faring in the marketplaces created by health reform, as well.
Last month, the Blue Cross Blue Shield Association released a report indicating that new members who enrolled in
individual plans used more medical services of all kinds and accounted for
health care spending 22 percent higher than people with employer-based insurance
in 2015.
At Aetna's earnings call for the fourth quarter of 2015, chief executive Mark
Bertolini said the insurer was concerned about the marketplaces.
"This business remained unprofitable in 2015 and we continue to have serious
concerns about the sustainability of the public exchanges," Bertolini said.
Katherine Hempstead of the Robert Wood Johnson Foundation said
UnitedHealth's move was significant, but far from a death knell for the
marketplaces. She took note of the fact that instead of leaving Georgia
altogether, UnitedHealth is going to continue to participate, offering insurance
through a subsidiary called Harken Health.
"I donft think the exit of this carrier is, in and of itself, a threat to the
overall market. Itfs a message," Hempstead said. "To me, itfs a sign of a
process of evolution, where the sellers really have to change what they do to
make money in this market -- and theyfre starting to."