UnitedHealth Group CEO Stephen Hemsley, who first hinted at this decision months ago, reiterated concerns about the financial viability of the law’s health insurance marketplaces. | AP Photo
By PAUL DEMKO
The nation’s largest health insurer is significantly cutting back its Obamacare business and will sell plans in only “a handful” of state exchanges in 2017, its CEO said on a call with investors Tuesday morning.
UnitedHealth Group CEO Stephen Hemsley, who first hinted at this decision months ago, reiterated concerns about the financial viability of the law’s health insurance marketplaces. The company said Tuesday it expects to lose $650 million on its exchange business this year.
The company’s Obamacare exodus is a major symbolic loss for the law ahead of the sign-up period for 2017 health plans this fall — the final enrollment season under the Obama administration. The White House is hoping to set the insurance marketplaces on firm footing before leaving office.
UnitedHealth sold coverage in 34 states this year. Tuesday’s announcement came days after it already indicated it will drop out of Arkansas and Michigan next year and significantly scale back its footprint in Georgia.
However, the company’s announcement may have a limited effect on Obamacare’s exchanges. An analysis released Monday by the Kaiser Family Foundation found that consumers in more than half of the 1,855 counties where UnitedHealth now competes would have just one or two health plans to choose from if the company withdraws and no new competitors emerge. But the study also found that exchange customers would be unlikely to see a significant difference in premiums on the most popular exchange plans.
Obama administration officials have stressed that competition in the exchanges has increased in each of the first three years of operations and that the loss of one insurer won’t significantly limit consumers’ options. They point out that more than 90 percent of consumers in some of the largest states where United is competing for Obamacare customers, including Florida and Ohio, could find a cheaper option from other companies in 2016 for the most popular plans.
UnitedHealth initially took a cautious approach to the exchanges, selling plans in just four states when the exchanges opened in 2014. But the company ramped up its Obamacare offerings over the next two years, a decision that Hemsley has indicated was a mistake.
“In retrospect, we should have stayed out longer,” Hemsley told investors late last year. “It will take more than a season or two for this market to develop.”
UnitedHealth had nearly 800,000 exchange customers at the close of the first quarter. The company expects enrollment in 2016 health plans to fall to 650,000 by the end of the year.
About 12.7 million people signed up in exchange plans nationwide this year.