Competition Suffers Most If UnitedHealth Exits Obamacare In 2017: Analysis

UnitedHealth Group Inc. signage stands in front of company headquarters in Minnetonka, Minnesota in 2016. (Mike Bradley/Bloomberg via Getty Images)

If UnitedHealthcare follows through on its threat to quit the health insurance marketplaces in 2017, more than 1 million consumers would be left with a single health plan option, forecasted an analysis released Monday.

A UnitedHealthcare pullout would be felt most in several states, generally in the South and Midwest, where consumers would be left with little choice of plans, the Kaiser Family Foundation reported. (KHN is an editorially independent program of the foundation.)

In most of the 34 states where United operates this year, though, the effect would be modest for premiums and the number of plan options, Kaiser said.

Kaiser’s analysis was made public a day before UnitedHealth Group, the insurer’s parent, is expected to announce 2017 plans for the Affordable Care Act’s marketplaces that provide coverage to individuals who shop for their own health insurance.

In the past week, state officials confirmed UnitedHealth was withdrawing from marketplaces in Arkansas and Michigan and partially leaving Georgia. In Atlanta and Chicago, a new UnitedHealthcare subsidiary, Harken Health, began operating this year and is expected to remain.

Last year, UnitedHealthcare said it was losing hundreds of millions of dollars on the Obamacare plans and would decide its future participation by mid-2016. Health plans need to begin notifying states by May whether they plan to sell in marketplaces next year.

More than one in four counties where UnitedHealthcare participates nationally would see a drop from two insurers to one if the company exits and isn’t replaced by a new entrant, and a similar number would go from having three insurers to two, the Kaiser analysis found.

In total, 1.8 million enrollees would go from having a choice of three insurers to two, and another 1.1 million would go from having a choice of two insurers to one, the report said.

A UnitedHealth withdrawal would leave marketplace enrollees in Kansas and Oklahoma with only one insurer if another company does not move in, Kaiser said.

Its analysis cited the potential impact in other states if UnitedHealthcare drops out:

  • In Alabama, about two-thirds of enrollees — those living in 60 counties — would go from having a choice of two insurers to a single insurer, and the remaining 33 percent of enrollees in seven counties would have two insurers to pick from.
  • In Mississippi, 43 percent of enrollees in 50 counties would drop to just a single insurer and the remaining 57 percent in 32 counties would still have two.
  • In Arkansas, there would be a drop from four insurers to three insurers in every county if a new insurer did not replace the company.
  • In Georgia, nearly 50,000 marketplace enrollees, or 8 percent of the total, would be left with a choice of two insurers. Another 20,000 enrollees, or 3 percent, would have only one insurer if no new entrants replaced UnitedHealthcare.

Nationally, UnitedHealthcare’s participation on the exchanges had a relatively small effect on average premiums, based on Kaiser’s analysis of 2016 insurer premiums.

The company was less likely to offer one of the lowest-cost silver plans, where most enrollees sign up. When it did offer a low-cost option, its pricing was often close to its competitors. As a result, the weighted average premium for a benchmark silver-level plan would have been about 1 percent higher had United not participated in 2016. Federal subsidies in the marketplaces are based on the second-lowest silver premium.

Benjamin Wakana, a spokesman for the Centers for Medicare & Medicaid Services, said the government expects insurers to make adjustments in entering and exiting states.

“The marketplace should be judged by the choices it offers consumers, not the decisions of any one issuer. That data shows that the future of the marketplace remains strong.”

UnitedHealth Group will release its first-quarter earnings Tuesday morning and CEO Stephen Hemsley is scheduled to discuss the results with analysts and investors at 8:45 a.m. ET.

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