Study says limited effect if major insurer leaves health exchanges

Dan Gorenstein Apr 19, 2016
Share Now on:
HTML EMBED:
COPY
UnitedHealth had initially entered 34 exchanges. Image via UnitedHealthcare/YouTube

Study says limited effect if major insurer leaves health exchanges

Dan Gorenstein Apr 19, 2016
UnitedHealth had initially entered 34 exchanges. Image via UnitedHealthcare/YouTube
Share Now on:
HTML EMBED:
COPY

This story’s text has been updated. 

Insurance giant UnitedHealth has announced it is pulling out of most of the Affordable Care Act’s marketplace by 2017, remaining only in a fraction of the 34 current state exchanges.

At the same time, a new report finds if United pulled out of the exchanges entirely, the impact on prices and competition would be modest.

That finding is important as industry observers wonder whether United backing off is a signal of the first defection among major insurers, or a reflection of the company’s business strategy.

“United has always been tepid about these markets,” said Leemore Dafny, an economist at the Kellogg School of Management at Northwestern. “They were slow to get in and they are fast to get out.”

Certainly, some communities will feel the effect, said Kaiser Family Foundation researcher Cynthia Cox. 

Cox, who analyzed United’s role on these markets, said this “is going to leave the entire state [of Oklahoma] with just one insurance company on the exchange.”

If prices do rise, Cox said subsidies will likely increase, meaning that it will take more federal funding to cover the cost of subsidies that help underwrite the coverage.

These repercussions underscore why it’s important from a budgetary standpoint that as one insurer leaves, the exchanges find a replacement.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.

We’re here for you.

As COVID-19 reshapes our economy, our newsletter will help you unpack the news from the day.