Three years into the exchange market’s existence, insurers have an incentive to pressure the federal and state exchange regulators with threats to exit the markets to gain leverage when their premium increases are reviewed, or to win favorable treatment on other issues, such as a permanent repeal of an Affordable Care Act tax on their products.
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UnitedHealthcare, a major health insurer, will no longer sell insurance on the Affordable Care Act marketplace in Texas next year, according to a letter filed with state regulators.
UnitedHealthcare signaled previous year that it was reconsidering its presence on the exchanges after losing hundreds of millions of dollars.
The company added that it ended the quarter with 795,000 public-exchange enrollees – a number it hopes to cut to 650,000 by December.
The country’s largest health insurer, UnitedHealth, has announced its plan to exit most ObamaCare state exchanges where it now operates by 2017. The ACA red ink led to an overall loss of $31 million by the insurer in 2015. UnitedHealth CEO Stephen Hemsley conceded as much Tuesday on a conference call with Wall Street analysts, saying that the exchange market has turned out to be smaller and riskier than expected. However, customers in the states that the company is leaving will likely have to shop for a new plan for 2017.
Citing the Urban Institute study, the Los Angeles Times’ columnist Michael Hiltzik wrote: “United didn’t offer wider networks for some public-spirited reason; they did so because they were incompetent at designing health plans for the individual market”.
UnitedHealth said that there were not enough people in good health participating in the exchanges to offset the cost of those needing care. UnitedHealthcare served nearly 800,000 people across 34 states in 1Q 2016 alone, noted a KHN article. Health plans need to begin notifying states by May whether they plan to sell in marketplaces next year.
According to the U.S. Department of Health and Human Services, 39 health insurers stopped doing business in one or more states this year, while 40 entered new markets.
Other health insurers including Aetna Inc and Anthem Inc are also large players on the exchanges.
So far, NY and Nevada have confirmed that UnitedHealth plans to remain on their ACA exchanges next year.
But Zeldin said the ACA exchange in Georgia will still be competitive, even without UnitedHealthcare.
Insurers say they have struggled, in particular, with customers who have signed up for coverage outside regular enrollment windows and then dumped expensive claims on their books, a problem the government has said it would address. Its first-quarter revenues of $44.5 billion grew 25 percent, or $8.8 billion, compared to past year, buoyed by its Optum division and other lines of business.
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“This business remained unprofitable in 2015 and we continue to have serious concerns about the sustainability of the public exchanges”, Bertolini said.
