This would not be good news for the ACA (aka Obamacare).
Generally speaking, people look at the Affordable Care Act’s (aka Obamacare) state marketplaces as a general success. Sure, there were instances of mismanagement on the state level in certain areas and the ACA website was a technological horror-show in its early iterations, but after a bumpy start the ACA marketplace eventually did what it set out to do; bring insurance to more individuals (specifically those uninsured) through the state marketplaces.
A big part of that success came from private insurance companies willing to compete in the ACA’s state marketplace. This gave individuals shopping in these marketplaces more options when picking health insurance, which generally drove down costs and gave people more incentive to shop through the marketplace than to just go directly to private insurance companies. However that process of health insurance companies competing in the state marketplaces may be in danger.
According to an investor’s meeting, UnitedHealth – one of the largest health insurance companies in the US – may withdraw from the ACA state marketplace due to poor financial performance. The insurance company is to decide if they will continue to participate in the ACA marketplace in the beginning of 2016. While it might be a reach to assume if an insurance company is going to leave the ACA or not just based on an investors call – where many ideas are thrown around that don’t materialize into anything worthwhile – it’s still alarming news if it were to actually take place.
Being the one of the largest health insurance companies in the US, UnitedHealth being part of the ACA’s state marketplaces was essential to the program’s early success. In fact, according to the Kaiser Family Foundation, UnitedHealth was one of the largest health insurance providers for the ACA in 2013. Its presence was integral for the ACA’s initiative of healthcare expansion. While overall UnitedHealth only covers 5.6% of the total number of individuals in the ACA, in a state marketplace level however, UnitedHealth is a major player.
Take the instance of Nevada, UnitedHealth insures almost half of the state (46%) that use the ACA’s state marketplace for their health insurance. In a similar circumstance, UnitedHealth insures almost 30% of all ACA enrollees that are in New York. According to health data firm Avalere, in 2013 UnitedHealth participated in 28 state marketplaces as being the top three insurer for those states in that year.
While the ACA has had success in insuring more individuals, which was the major crux of the ACA in general, yet almost half of the state marketplaces face financial troubles in the future. It’s logical for UnitedHealth to look at all this and bow out, but for the future success of the ACA, it’s vital to keep UnitedHealth within the fold.
(Photo Credits: UnitedHealthcare Group Website, Dickhouse)