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UnitedHealth may expand PPACA exchange effort

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(Bloomberg) – Executives at UnitedHealth Group Inc. (NYSE:UNH), the biggest U.S. health insurer, say they are thinking about participating in more public health insurance exchange programs in 2015.

UnitedHealth is selling commercial “qualified health plan” (QHP) coverage through the Patient Protection and Affordable Care Act (PPACA) exchanges in just five states this year.

It’s “still very, very early in the life of the exchanges,” Stephen Hemsley, UnitedHealth’s chief executive officer , said today during a conference call with securities analysts.

UnitedHealth won’t have to make a final decision about 2015 exchange participation until September, Hemsley said.

But UnitedHealth now “has a bias to increase that participation in 2015,” according to Gail Boudreaux, an executive vice president at UnitedHealth. “The size of the overall market is positive.”

The executives talked the PPACA public exchange systems during a review of first-quarter earnings.

UnitedHealth is reporting $1.1 billion in net income for the first quarter on $32 billion in revenue, compared with $1.2 billion in net income on $30 billion in revenue for the first quarter of 2013.

The drop in net income was due mainly to Medicare Advantage program cuts, executives said.

Also during the call, executives said they may give up market share in New York state.

“We believe several carriers there, including new entrants, are pricing well below cost, and at what we would view as unsustainable pricing levels,” Hemsley said. “If this climate continues, we could see some further pressure on risk-based membership beyond the ranges we anticipated this year.”

Several insurers that had been sitting on the sidelines returned to the state’s market in January, and that has contributed to the intense level of competition, Boudreaux said.

UnitedHealth will “stay very disciplined in our pricing” there, Boudreaux said.

Executives did not say whether the level of price competition is different for the plans sold through the public exchange system and the plans sold outside the exchange system.

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