Benefits & Compensation News

Why the largest insurer in the country is ditching the Obamacare exchange

UnitedHealthCare’s statement about leaving the ACA marketplace appears to be more than just an empty threat. Now the question is: Will other insurers follow the lead of the largest insurer in the country?

As a result of losing $475 million on its ACA exchange enrollees’ business last year, the insurer has decided to scrap most of the plans it offers through the state and federal marketplace in 2017, according to a UnitedHealthCare announcement.

The insurer will still offer plans in a “handful” of states, however.

Premium hikes coming?

So what does this mean for the Obamacare exchanges? Is UnitedHealthCare the first insurer domino in a chain that’s likely to collapse the entire marketplace? Probably not. But healthcare experts do worry other insurers may take drastic actions. In fact, a number of insurers — Blue Cross Blue Shield and Aetna — have already hinted that the current pool of exchange policies is unprofitable due to high health claims.

Although Obamacare has added rules aimed at curbing the number of people who sign up for an ACA policy after the open enrollment deadline, and urged patience with the current exchange marketplace, there’s a good chance that insurers will raise premiums to cope with profit and cost issues.

That could put the administration in a tricky spot. Reason: It wants to keep premiums low to make the ACA exchange marketplace as attractive as possible. And to do so it simply can’t afford to have insurers leave the marketplace entirely — like UnitedHealthCare is doing.

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