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. U.S. Rep. Charlie Crist and estranged wife Carole put Beach Drive condo on the market

    Real Estate

    ST. PETERSBURG — U.S. Rep. Charlie Crist and his estranged wife, Carole, have put their Beach Drive condo on the market for $1.5 million.

    U.S. Rep. Charlie Crist and his estranged wife, Carole, have put their Beach Drive condo in Parkshore Plaza on the market for $1.5 million. {Courtesy of Amy Lamb/Native House Photography]
  2. St. Petersburg showdown: Kriseman faces Baker for first time tonight at the Rev. Louis Murphy Sr.'s church

    Local Government

    ST. PETERSBURG — The mayor's race has been making headlines for nearly two months as Mayor Rick Kriseman and former Mayor Rick Baker have been making speeches, pressing the flesh at fundraisers and gathering their ground forces for an election battle that has already broken fundraising records.

    Former Mayor Rick Baker, left, is challenging incumbent Mayor Rick Kriseman, right, to become St. Petersburg mayor.
  3. Tampa moves to pause permits for 5G wireless equipment to assess impact of new Florida law

    Blogs

    To business groups, the bill that Gov. Rick Scott signed Friday will clear the way for superfast 5G wireless communications and give Florida an edge in attracting high-tech companies.

    Tampa Mayor Bob Buckhorn and other local officials have worried that a new state law aimed at facilitating the installation of 5G wireless technology could clutter scenic corridors like Tampa's Riverwalk.
  4. Trump takes another swipe at CNN after resignations over retracted Russia story

    National

    NEW YORK — President Donald Trump used the resignations of three CNN journalists involved in a retracted Russia-related story to resume his attack on the network's credibility Tuesday.

    Anthony Scaramucci, a senior adviser to President-elect Donald Trump, talks to reporters in the lobby of Trump Tower in New York. [Associated Press]
  5. Clearwater woman dies after losing control of SUV, flipping in Palm Harbor

    Accidents

    A Clearwater woman died early Tuesday morning when she lost control of her SUV and crashed in Palm Harbor, according to the Florida Highway Patrol.