(Bloomberg) — UnitedHealth Group Inc. (NYSE:UNH), the largest U.S. health insurer, has decided to call it quits in the individual exchange programs in two states, in the latest challenge to President Barack Obama’s health care overhaul.
The insurer won’t sell plans for next year in Georgia and Arkansas, according to state insurance regulators. Tyler Mason, a UnitedHealth spokesman, confirmed the exits. He declined to say whether the company would drop out of additional states.
Many insurers have found it difficult to turn a profit in the Patient Protection and Affordable Care Act (PPACA) exchange system, in which individuals turned out to be more costly to care for than the companies expected. UnitedHealth and Aetna Inc. (NYSE:AET) both posted losses from the policies last year, as did big Blue Cross and Blue Shield plans in states like North Carolina.
UnitedHealth began warning in November that it might leave PPACA exchange markets as it racked up losses. In December, the company said it should have stayed out of the individual exchanges for longer.
UnitedHealth’s decision to stop offering PPACA exchange plans in two states in 2017 means that people who are currently enrolled with the insurer in those states will have to choose a new health insurance provider in 2017. The decision does not affect their current coverage.
PPACA lets a state choose between running its own state-based exchange or having the U.S. Department of Health and Human Services (HHS) run its exchange. Both Georgia and Arkansas have let CMS provide exchange services for their residents through the HHS HealthCare.gov system.
In Arkansas, it’s clear that UnitedHealth will withdraw from the exchange market, but the filing period for the off-exchange individual and group markets is still open, according to the Arkansas Insurance Department.
In Georgia, UnitedHealth is leaving the off-exchange individual market as well as the exchange market, but it’s staying in both the small-group and large-group markets outside of the exchange system, according to the Georgia Department of Insurance.
While UnitedHealth is the biggest carrier in the United States, with about 42 million medical customers, it has a smaller role in the PPACA exchange system market. The company had about 650,000 in individual exchange policies as of Dec. 31.
About 12.7 million people signed up for PPACA public exchange coverage for this year, including about 587,800 in Georgia and 73,600 in Arkansas, according to the Centers for Medicare & Medicaid Services. (CMS). CMS, an arm of HHS, doesn’t disclose what insurers people picked.
Kenneth Ryan James, a spokesman for the Arkansas Insurance Department, said UnitedHealth had a “small footprint” in the state, where Blue Cross and Blue Shield plans are dominant. UnitedHealth is also exiting that state’s small-business exchange and a related business that sells private Medicaid plans, he said. The Arkansas Democrat-Gazette earlier reported UnitedHealth’s decision to exit Arkansas.
Including UnitedHealth, Georgia has nine health insurers that currently offer PPACA exchange polices, according to Glenn Allen, a spokesman for the state’s insurance commissioner. Others include Aetna, Humana Inc. (NYSE:HUM) and Cigna Corp. (NYSE:CI). No other company has yet told Georgia that it’s exiting. Companies have until May 11 to decide, he said.
Allison Bell contributed information to this report.
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