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Study says limited effect if major insurer leaves health exchanges

UnitedHealth had initially entered 34 exchanges. Image via UnitedHealthcare/YouTube

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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.

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