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If UnitedHealth Group Inc. were to bow out of the public health exchange business in 2017, as it has threatened to do, the health insurer's exit would do little to harm marketplace competition, according to a new report.
Additionally, the failure of multiple health insurance cooperatives established by the Affordable Care Act is unlikely to endanger the federal exchange, according to the report released Wednesday by the Urban Institute conducted for the Robert Wood Johnson Foundation.
Minnetonka, Minnesota-based UnitedHealth in November first warned it might stop selling policies on the health care exchanges in 2017, citing losses from low enrollment numbers and high medical costs from members. The insurer reiterated its threat last week after posting $720 million in losses in 2015, including $245 million set aside for 2016 losses, related to exchange business.
The announcement that UnitedHealth may pull back on offering plans for 2017, as well as the folding co-ops, have fueled concern surrounding the future of the ACA.
But in its report, the Washington-based nonprofit claims neither UnitedHealth nor the co-ops have been major players in any health insurance exchange markets and do little to drive competition.
By analyzing 2015 and 2016 premium data of marketplace insurers in 26 states and the District of Columbia, researchers found that out of 81 ratings regions in those states, UnitedHealth in 2015 offered the lowest-cost silver plan in only four regions of the 36 it participated in, and the second-lowest cost silver plan in only another four.
In 2016, after expanding its marketplace coverage, UnitedHealth offered the lowest-cost silver plan in only four out of the 48 regions, and offered the second-lowest-cost silver plan in 11 others, according to the report.
UnitedHealth's “premiums are generally high relative to other competitors, presumably to mitigate risk and to compensate for what may be a broader-than-average provider network,” the report said.
In addition, the co-ops, which offered coverage in 36 of the 81 ratings regions in 2015, offered the lowest-cost silver plan in 13 of those regions and the second-lowest-cost silver plan in 11.
In 2016, after some co-ops folded, reducing the number of ratings regions they participate in from 36 to 22, a co-op is the lowest-cost silver plan insurer in five regions and the second-lowest-cost in nine others.
Blue Cross leads pricing
Blue Cross Blue Shield Association insurers are more often among providers with the lowest cost exchange plans, according to the report.
“Marketplaces are increasingly driven by competition among Blue Cross-affiliated insurers, Medicaid insurers, provider-sponsored insurers, and in fewer rating regions, local or regional insurers,” the report said.
More than UnitedHealth's exit and the co-ops' failure, issues that could harm the future of the ACA include affordability, plan network adequacy, future funding for outreach and enrollment assistance and the sufficiency of risk adjustment across insurers, the report said.
“A potential withdrawal by United or any other national carrier would be important in terms of what it might say about the stability of the marketplace, but in terms of consumer options, no unfillable void would be created were they to leave,” Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation, said in a statement released with the report. “In the case of the co-op failures, while some of those closures were abrupt and affected large numbers of consumers, other options were available on the marketplace.”
UnitedHealth Group Inc.'s first foray with the health insurance exchanges turned out to be worse than expected as it lost $720 million on its individual-market health plans in 2015, the company said Tuesday, nearly $300 million above estimates made a few months ago.