(Bloomberg) — Although UnitedHealth Group Inc. (NYSE:UNH) hasn't been a major seller of the Patient Protection and Affordable Care Act (PACA) insurance plans, a further retreat from President Barack Obama's health insurance reform program could pose problems for PPACA exchange users in some states.
So far, UnitedHealth has said it will exit the exchange markets next year in Georgia, Michigan and Arkansas. Oklahoma regulators said on Monday that UnitedHealth is also quitting that state's exchange. UnitedHealth is also leaving the off-exchange individual markets in Georgia and Michigan. As of last week, its plans for the off-exchange market in Arkansas were not yet known. The company's current intensions for the Arkansas and Oklahoma individual off-exchange markets were not available at press time.
While Michigan and Arkansas can probably weather UnitedHealth's move, some consumers in Georgia and Oklahoma may feel a lack of choices, according to a Kaiser Family Foundation analysis of UnitedHealth's offerings across the United States.
The PPACA exchange system's success depends on private insurers selling plans in government-created markets, called exchanges, in each state. The fewer insurers participating, the harder it is for the program to achieve its goal of extending coverage to more Americans. Other states where consumers would have the most to lose if UnitedHealth drops out include Alabama, Louisiana and Tennessee, according to the Kaiser study.
"It's likely that in places where they were one of the only insurance companies, and they priced low relative to their competitors, they're important players," Cynthia Cox, one of the report's authors, said by phone. "In certain areas, there would be a need for individuals to shop around."
Modest overall
Nationwide, UnitedHealth offered PPACA exchange plans in 34 states for the current year. If UnitedHealth left all those states' exchanges, about 3 million exchange plan enrollees would see their choices reduced to just one or two insurers for next year, the Kaiser study shows. About 9 million people would still have three or more plans to pick from.
Insurers are currently telling regulators where they plan to offer exchange policies next year, and UnitedHealth hasn't yet laid out its 2017 national strategy. UnitedHealth declined to comment on its plans ahead of its first-quarter 2016 financial results, which are scheduled to be released Tuesday.
PPACA gives many consumers subsidies to help them buy coverage, and those payments are based on the cost of the second-cheapest silver plans. Silver plans typically cover about 70 percent of an individual's health care costs, though subsidies can raise that amount.
Cheapest silver
The U.S. Department of Health and Human Services (HHS) said the report shows that UnitedHealth plays a relatively small role in the exchange system. HHS has previously said it expects insurers to enter and exit the system each year, and that it expects the exchanges to "continue to thrive."
Cox and Ashley Semanskee, a Kaiser research assistant, looked at places where a UnitedHealth exit would reduce competition to just one or two insurers and where the company offered one of the two cheapest silver-level plans. Overall, consumers have tended to enroll in those cheaper plans, Cox said.
Michigan should be able to endure the loss of United because the insurer only participates in seven of the state's 83 counties, and it's not among the cheapest in any of those counties, according to the Kaiser analysis. United also wasn't offering cheap plans in Arkansas.
Tough market
