UnitedHealth Will Leave Most ACA Exchanges in 2017

UnitedHealth Group started the year in 34 insurance exchanges, but that number will be a lot less come 2017. CEO Stephen Hemsley announced that the company will only participate in a "handful" of Affordable Care Act exchanges next year.

UnitedHealth Group started the year in 34 insurance exchanges, but that number will be a lot less come 2017. In a conference call, CEO Stephen Hemsley claimed that the smaller market size and higher risk of the Affordable Care Act (ACA)’s exchanges are limiting the company’s ability to continue offering plans.

The news follows months of speculation about UnitedHealth’s continued involvement in the exchanges after Hemsley announced in November 2015 that the company was pulling back on marketing efforts for ACA plans and indicated that losses from the exchange plans were too high. Shortly after, Hemsley expressed regret at even having entered the exchange market.

“It was for us a bad decision,” Hemsley said in December 2015. “In retrospect, we should have stayed out longer.”

Now, UnitedHealth has announced it will not be offering ACA plans in Arkansas, Georgia, and Michigan in 2017, and more states are likely to be added to the list. In the call on April 19, Hemsley didn’t give an exact number of how many states UnitedHealth would exit.

"We will be down to a handful of states that we will be actively participating in the exchanges," was all he said.

In January, UnitedHealth said it expected to lose $1 billion from the exchanges over 2015 and 2016. However, despite losses in the ACA exchanges, UnitedHealth’s financial position is strong. Revenues in the first quarter of 2016 were $44.5 billion, which is up 25% from the same time last year.

The call on April 18 followed right on the heels of a report from the Kaiser Family Foundation, which analyzed the effect of UnitedHealth exiting all 34 states. The report found that a departure from all 34 states could have a significant impact on insurer competition and premiums on some markets with a more pronounced impact in rural areas. However, there would only be a minimal impact on the average premium nationwide as UnitedHealth is not one of the lowest cost plans.