Experts assess the fallout as United exits ACA exchanges

UnitedHealth Group’s (UHG’s) announcement of its exit from all but a “handful” of state Affordable Care Act (ACA) exchanges, will have a modest effect on the marketplace, according to industry watchers.

In a recent earnings call, UHG’s CEO said that in 2017 it will exit most of the 34 states where it offers plans on the ACA exchanges, The Washington Post reported. The nation’s largest health insurer already announced it plans to pull out from health insurance marketplaces in Arkansas, Michigan, Connecticut and parts of Georgia.

Back in November, UnitedHealth Group expressed indecision over whether it would continue to participate in ACA exchanges due to significant revenue losses.

Read: UnitedHealth Group may exit ACA exchanges: What to Know

Kingsdale

“It’s of modest significance for the marketplaces,” says Jon Kingsdale, PhD, professor of healthcare policy at Brown University’s Executive Master of Healthcare Leadership program, and director, Wakely Consulting Group.

“United is a small percent of enrollment on the marketplaces and is usually not one of the better-priced or lower-priced plans available in a very price-sensitive market-those two facts are connected,” Kingsdale tells Managed Healthcare Executive. “It is frankly not very well suited, or ideally suited, to compete on ACA marketplaces because the competitive advantage that a national plan such as United offers is not as well suited as local plans.”

For example, he said, United has the advantage of being a national company, but that’s not terribly relevant for individuals buying insurance in Arkansas. “It’s very relevant for a company that has employees in multiple states but it’s not a relevant advantage on the ACA marketplace.”

According to Kingsdale, UHG has the advantage of being deep in analytics for employers, “for configuring all sorts of self-insured policies,” he says. “But none of these are advantages for consumers on the marketplace.”

What consumers on the marketplace want overwhelmingly is the lowest price possible, and that comes from having the best provider-payer arrangements, and that comes from having deep penetration in the local market, says Kingsdale. “It’s not a surprise that when in a very competitive marketplace where it’s hard to make claims costs over the first few years that United has not done well.”

Hoagland

But, that’s just the way markets work, Kingsdale says. “It’s not a ding on the ACA-that’s what a good competitive market in any field does. You could as easily say that United deciding to be very selective in which marketplaces it plays on is a sign of the competitiveness and the strength of the ACA marketplace.”

G. William Hoagland, senior vice president, Bipartisan Policy Center, agrees. "In some ways, rather than this being an indication that the ACA is not working, one could make a very salient point quite the opposite," Hoagland says. "More competition brought about by the exchanges, even for a big national carrier, in select markets, can lead to lower costs of insurance while still providing sufficient choice for the consumer."

Next: Effect on exchange premiums

Effect on exchange premiums

If UHG withdraws from markets across the country-and isn't replaced by rivals-premiums for exchange plans could rise modestly, about 1% on average, according to a county-by-county analysis released by the Kaiser Family Foundation (KFF). The premium increase would amount to about $4 per month.

Brill

In 2016, UHG was less likely than other plans to offer the lower-cost silver plans on the exchanges, which is what many enrollees gravitated to, explains Managed Healthcare Executive Editorial Advisor Joel Brill, MD, chief medical officer, Predictive Health LLC. “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% higher had United not participated in 2016.”

In some markets, however, UHG’s exit could significantly impact rates. The KFF study shows premiums rising more than $100 a month in 13 counties where there is little competition. And more than half of U.S. counties would have only two insurance companies offering plans on the exchanges, the analysis found.

More than 1 million consumers would be left with only one health plan option. 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.