UnitedHealthcare Exit from HIEs Could Greatly Impact Rural Areas

When Stephen Hemsley, UnitedHealth Group CEO, said in late April the insurance services conglomerate was pulling out of most of the health insurance exchanges in which it participates, there was little surprise other than the timing of the announcement. The company, the largest health insurer in the U.S., had been warning for months it expected to lose nearly $650 million this year on exchange plans purchased by approximately 795,000 customers. Those customers represent a small percentage of the 13 million people who bought Affordable Care Act (ACA) plans for this year, and are an even smaller percentage of the total 47.7 million people the company insures.

UnitedHealthcare hasn’t released an official listing of the states it’s vacating, but an industry publication, Insurance Journal, says so far Alabama, Arkansas, Colorado, Connecticut, Georgia, Louisiana, Maryland, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Pennsylvania, Tennessee, Texas and Washington regulators say the company has informed them it will not book business next year. Other states are waiting for word from the company.

While some groups say the pullout is more evidence of the failure of the ACA, others point out that UnitedHealthcare was not a major force in the exchange market anyway. The impact of the pullout will vary by region, according to a Kaiser Family Foundation analysis. The exchanges were originally hailed by supporters due to expected competition and its effect holding down prices. The pullout would most likely be felt in the South and Midwest because consumers would have little choice of plans, assuming no other insurers moved into the markets.

Nationally, more than 25% of the counties in the markets where UnitedHealthcare participates would see a drop from two insurers to only one, and another 25% would have only two choices, down from three.

In terms of enrollees, 1.1 million would move down to one choice from two, and 1.8 million would go down to two choices from three, according to the report.

UnitedHealthcare operated in 34 states this year, and in most of those Kaiser found the withdrawal would have only minimal effect.