Insurer Competition, Monthly Premiums Could Be Affected in Some Markets if UnitedHealth Group Exits ACA Marketplaces

A withdrawal by UnitedHealth Group from the Affordable Care Act (ACA) marketplaces in 2017 could have a significant impact on insurer competition and premiums in some markets, though it would have a minimal effect on the average benchmark premium nationwide, according to a new analysis from the Kaiser Family Foundation.

Late last year, UnitedHealth announced that it experienced significant financial losses in ACA compliant plans and that it would decide about future participation in ACA marketplaces during the first half of 2016.  So far, it has confirmed that it is withdrawing from the marketplace in Arkansas, Michigan, and partially withdrawing in Georgia.

The analysis is based on insurer participation and premiums in marketplaces in 2016. It assumes that no new insurers will enter markets where UnitedHealth is currently participating and does not assess United’s statements about its losses or the reasons for them.

The impacts of a UnitedHealth withdrawal would vary considerably by state and market area, with a more pronounced effect in rural areas.

UnitedHealth participated in ACA marketplaces in 34 states in 2016; in 21 percent of U.S. counties it offered one of the two lowest-cost silver plans, the most popular options.

Without UnitedHealth’s participation in 2016, monthly benchmark premiums for the second lowest cost silver plan for a 40 year-old would have been $25 to $100 higher in 304 of 3,142 counties in the U.S. and more than $100 higher in 13 counties. A UnitedHealth exit would likely affect premiums most in Alabama, Arizona, Iowa, Nebraska and North Carolina, the analysis finds.

Since UnitedHealth often is not one of the lower cost plans, the effect nationally on premiums of an exit by the insurer would be modest. The weighted national average monthly premium for the second lowest-cost silver plans in 2016 would have been 1% higher (less than $4 per month for a 40-year-old), according to the analysis.

A withdrawal by UnitedHealth nationwide would also leave some markets with fewer choices and less competition. The number of counties with one or two insurers offering health plans in the marketplaces would increase from 1,121 counties to 1,653 counties. A UnitedHealth withdrawal nationwide would result in an additional 1.8 million enrollees with a choice of two insurers, and an additional 1.1 million could be served by a marketplace with only one insurer.

However, even if UnitedHealth leaves all markets, the majority of counties (1,490) and ACA marketplace enrollees (8.9 million) could continue to have a choice of three or more insurers, according to the analysis. A minimum of three insurers is generally considered to be sufficient for effective competition.

The new report provides a state by state analysis of UnitedHealth’s current participation in the ACA marketplaces to help gauge the effect of the insurer’s participation decisions for 2017.