Citing the impact on its bottom line, UnitedHealth will leave all but a handful of insurance state insurance marketplaces. Here's how that move could affect consumers.
Just five months after UnitedHealth announced it was scaling back marketing efforts of insurance plans offered under the Affordable Care Act and threatened to pull out of Obamacare altogether, the nation’s largest health insurer says it will exit exchanges in all but a “handful” of the 34 states where it currently operates by 2017.
UnitedHealth CEO Stephen Hemsley made the announcement Tuesday during the company’s quarterly earnings conference call, CNN Money reports. Hemsley said the insurer has taken a significant financial hit as a result of its marketplace plans.
“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,” Hemsley explained. “Next year we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017.”
The health insurance exchanges are online marketplaces where consumers can compare and purchase health insurance. The federal exchange, www.healthcare.gov, is the default exchange for states that chose not to run their own marketplaces.
UnitedHealth said it lost $475 million on marketplace plans in 2015 and stands to lose $650 million more this year.
Hemsley said that although UnitedHealth will be absent from nearly all exchanges by 2017, the company will “continue to remain an advocate for more stable and sustainable approaches to serving this market and those who rely on it for their care.”
UnitedHealth insured 795,000 Americans through the exchanges at the end of March, the Associated Press reports. That’s about 6 percent of the 12.7 million Americans who signed up for a health plan for 2016 through the public exchanges.
Although UnitedHealth is the country’s biggest insurer overall, the company is not the largest in the individual insurance markets served by the exchanges, according to Kaiser Health News.
Still, a recent Kaiser Family Foundation analysis revealed that UnitedHealth’s absence from exchanges in the majority of the 34 states where it currently operates means “more than 1 million consumers would be left with a single health plan option,” and also will mean higher insurance premiums in several states, most notably Alabama, Arizona, Iowa, Nebraska and North Carolina.
According to the AP, industry watchers expect other insurers to tweak their marketplace participation for 2017 but don’t anticipate too many to follow UnitedHealth’s exodus from the exchanges.
“I think insurers will have to become more selective in terms of which exchanges and how they participate, but by far and away I think the United move will be the biggest one this year,” Mizuho Securities managing director Sheryl Skolnick told the AP.
What do you think of UnitedHealth’s plans to pull out of most of the health care exchanges? Have you purchased insurance on an exchange? Share your thoughts below or on our Facebook page.