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Blog

Nation's Largest Health Insurer Bolts Arkansas, Georgia ObamaCare Markets

04/11/2016

UnitedHealth Group made good on its threat to pull out of ObamaCare markets. The nation's largest health insurance company will pull out of the Arkansas and Georgia ObamaCare markets in 2017. The insurer has not publicly stated why it is leaving the exchanges, but past statements offer some insight into the decision. In short, unbalanced risk pools -- those with older and sicker consumers and a high utilization of coverage -- have led to losses.

In November, UnitedHealth Group revised earnings expectations downward by $425 million and suggested that it was considering withdrawing from the ObamaCare exchanges. "In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step," UnitedHealth Group CEO Stephen Hemsley said at the time. "We continue to be pleased with the growth and overall performance of our Company outside of the individual exchange products and look forward to strong, positive and broad based earnings growth across our enterprise in 2016."

UnitedHealth Group, according to the release, "pulled back" on market efforts for plans on the ObamaCare exchanges for the 2016 open enrollment period and "evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017." The insurer lost $720 million in the individual market in 2015.

On Friday, Arkansas and Georgia confirmed to The Hill that UnitedHealth Group would not offer health insurance plans on the ObamaCare markets in those two states in 2017. Consumers who have coverage through the insurer will have coverage for rest of 2016. Unless they receive coverage through their job or in some other way, they will have to purchase coverage through another insurer in 2017.

The Congressional Budget Office estimates that 12 million consumers will receive coverage through the ObamaCare exchanges in 2016. That is half an April 2014 estimate that projected 24 million people who would receive coverage through this year.