Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

UnitedHealth to leave Obamacare exchanges amid fears of big losses

CEO Stephen J. Hemsley said UnitedHealth will operate in just a handful of states’ exchanges.

CEO Stephen J. Hemsley said UnitedHealth will operate in just a handful of states’ exchanges.

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 reportedly plans to withdraw from health insurance marketplaces in Arkansas, Michigan 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 health care services at Leerink Partners. "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 report analyzed the effect if United were to drop out of all the exchanges where it participates, and found that 1.1 million people enrolled through the exchanges would have one insurer left to choose from if it withdrew from every market and 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 don't know what a 'handful' means, but it does sound like a pretty big pullout. But since we don't know which markets it is — we know some of them but we don't know many of the others — we don't know how big a deal it is in terms of competition," said Gary Claxton, a vice president at the Kaiser Family Foundation.

Even if the effects of United leaving most of the exchanges in which it participates could be relatively modest, Tuesday's announcement comes as other insurers have indicated concern over how they are faring in the marketplaces created by health reform. 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, Aetna 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 it would be easy to overplay and to underplay UnitedHealth's move. She said it 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 in marketplaces through a subsidiary called Harken Health.

"I don't think the exit of this carrier is, in and of itself, a threat to the overall market. It's a message," Hempstead said. "To me, it's a sign of a process of evolution, where the sellers really have to change what they do to make money in this market — and they're starting to."

UnitedHealth to leave Obamacare exchanges amid fears of big losses 04/19/16 [Last modified: Tuesday, April 19, 2016 8:14pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. BREAKING: Tropical Storm Harvey forms in Atlantic

    Hurricanes

    UPDATE: At 5 p.m. the National Hurricane Center said a hurricane hunter plane had determined that Tropical Storm Harvey had formed with sustained winds of 40 mph.

    Three tropical waves are expected to strengthen as they move across the Atlantic Ocean. [Courtesy of the National Hurricane Center]
  2. Editorial: Pinellas should join lawsuit challenging new state law

    Editorials

    The Florida Legislature has been on a cynical, constitutionally dubious quest to render local school boards powerless. The most direct assault is a new state law that strips school boards of much of their authority when it comes to the creation and funding of charter schools. It's time for the Pinellas County School …

  3. Editorial: Fix funding unfairness in Florida foster care system

    Editorials

    Many of the children in Florida's foster care system already have been failed by their parents. The last thing these kids need is to be failed by bureaucracy, too, and yet that's exactly what appears to be happening because of a needlessly rigid funding formula set up by the Florida Legislature. Child welfare agencies …

    The Legislature may have had good intentions when it came up with the funding plan, but it’s obvious that there is some unfairness built into it. The funding may be complicated, but the goal is simple: Making sure every child in need gets the help he or she needs.
  4. After Charlottesville, Judy Genshaft asks USF to "stand together with open minds and open hearts"

    Blogs

    TAMPA — In a welcome letter celebrating the start of a new academic year, University of South Florida System President Judy Genshaft took a moment to reflect on last weekend's violence in Charlottesville and asked students to unite with "open minds and open hearts."

    USF president Judy Genshaft posed with graduate Matt Jackson in 2015.
  5. Police: Man arrested in Largo had thousands of child pornography files

    Crime

    LARGO — A 43-year-old man was arrested Wednesday after detectives found thousands of child pornography images and videos on his laptop.

    Tyrone Jeffrey Russell, 43, was arrested Wednesday on child pornography charges, according to Largo police. [Pinellas County Jail]