United Healthcare

UnitedHealth Group Inc.’s campus in Minnetonka, Minn. The company will be exiting some Obamacare marketplaces in 2016. (Jim Mone / AP)

Noam N. Levey
April 19, 2016

UnitedHealth Group, the nation’s largest health insurer, announced Tuesday that it would stop selling health plans through the Affordable Care Act next year in most of the 34 of states where it operates.

The move, widely expected for months, will likely have relatively little effect on what most consumers pay for health coverage, as other insurers have out-competed UnitedHealth in the marketplaces created by the 2010 health law.

Nor will the decision seriously threaten UnitedHealth, as the marketplaces are a small fraction of the insurance giant’s overall business, which includes providing coverage to millions of people who get health benefits through an employer.

But UnitedHealth’s exit may leave some of the roughly 12 million Americans who rely on the marketplaces with fewer insurance choices next year. The announcement also underscores how challenging implementation of the complex health law remains, even three years after the marketplaces debuted.

UnitedHealth warned in November that it was having trouble with its marketplace business, noting that its customers were sicker than expected, leading to higher medical claims.

The company already announced it was pulling out of several states, including Arkansas and Michigan.

Speaking on an otherwise upbeat call with investors Tuesday, CEO Stephen Hemsley said UnitedHealth would remain in “only a handful of states” in 2017, though he did not specify which.

“Our own experience and performance have been unfavorable in these markets. The smaller overall market size, and shorter-term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” he explained.

Several other insurers, including state Blue Cross Blue Shield plans, have reported similar challenges in recent months.

And more than a dozen nonprofit insurance co-ops created through the law have shuttered, as they were overwhelmed by medical claims they couldn’t afford.

But other insurers, including California-based Kaiser Permanente and Indiana-based Anthem, another major player in the California market, have been more bullish on the new marketplaces.

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