Following mounting losses on its individual market policies, UnitedHealth Group plans to exit the Affordable Care Act marketplaces in all but "a handful" of states in 2017.
The country's largest for-profit payer has already said it will not offer exchange plans in Arkansas, Georgia and Michigan beginning next year. United had warned of such a move starting late last year, when it revised its 2015 earnings outlook to account for its individual market losses.
"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," CEO Stephen Hemsley said on a first-quarter earnings call Tuesday. Therefore, he said, the insurer "will remain in only a handful of states" in 2017.
The company, however, continues to advocate for "more stable and sustainable approaches to serving this market and those who rely on it for care," Hemsley added.
An analysis published Monday from the Kaiser Family Foundation says competition could indeed suffer if the insurer pulls out from all the exchanges in which it currently operates. United now participates in the ACA marketplaces in 1,855 counties, or 59 percent of all counties in the United States, it says. Given the counties that already have just one or two insurers participating, a full United exit would mean 53 percent of U.S. counties would have just one or two exchange insurers.
The effect on competition also varies by state. The analysis notes that a United exit would especially affect consumer choice and plan participation in Alabama, Kansas, Mississippi, North Carolina, Oklahoma and Tennessee.
However, United generally does not offer the cheapest plans in the exchanges; it has the lowest or second-lowest cost silver plan in just 35 percent of the counties where it participates, representing 16 percent of enrollees nationally. And even when it does offer low-price plans, they are not significantly cheaper than its nearest competitors, so the effect of its withdrawal would be "modest," the analysis says.
KFF researchers note that the longer-term consequences of a full market withdrawal by United are more challenging to pin down. But given how new the ACA marketplaces are, they write that it's "to be expected" that some insurers will leave the market if they aren't able to offer competitive or profitable plans.
Other major insurers have also hinted they are rethinking their participation in the exchanges. Humana executives, for example, said in a fourth-quarter earnings call that they will continue to evaluate the insurer's participation in the individual commercial business for 2017. The Blue Cross Blue Shield Association, meanwhile, has reported that its member companies' ACA plan enrollees were sicker and more expensive than expected.
To learn more:
- read the analysis
With insurers' ACA troubles, specter of 'death spiral' rises again
UnitedHealth to exit Georgia, Arkansas health insurance exchanges
UnitedHealth to exit Michigan exchange
UnitedHealth's state exchange exits: No big deal?
Losses lead UnitedHealth to rethink role in ACA exchanges