UnitedHealth has been selling Michigan exchange coverage only in Wayne County and in six of other counties. (AP/Carlos Osorio)

(Bloomberg) — Although UnitedHealth Group Inc. (NYSE:UNH) hasn’t been a major seller of the Patient Protection and Affordable Care Act (PACA) insurance plans, a further retreat from President Barack Obama’s health insurance reform program could pose problems for PPACA exchange users in some states.

So far, UnitedHealth has said it will exit the exchange markets next year in Georgia, Michigan and Arkansas. Oklahoma regulators said on Monday that UnitedHealth is also quitting that state’s exchange. UnitedHealth is also leaving the off-exchange individual markets in Georgia and Michigan. As of last week, its plans for the off-exchange market in Arkansas were not yet known. The company’s current intensions for the Arkansas and Oklahoma individual off-exchange markets were not available at press time.

While Michigan and Arkansas can probably weather UnitedHealth’s move, some consumers in Georgia and Oklahoma may feel a lack of choices, according to a Kaiser Family Foundation analysis of UnitedHealth’s offerings across the United States.

See also: UnitedHealth to exit Michigan PPACA exchange, state says

The PPACA exchange system’s success depends on private insurers selling plans in government-created markets, called exchanges, in each state. The fewer insurers participating, the harder it is for the program to achieve its goal of extending coverage to more Americans. Other states where consumers would have the most to lose if UnitedHealth drops out include Alabama, Louisiana and Tennessee, according to the Kaiser study.

“It’s likely that in places where they were one of the only insurance companies, and they priced low relative to their competitors, they’re important players,” Cynthia Cox, one of the report’s authors, said by phone. “In certain areas, there would be a need for individuals to shop around.”

Modest overall

Nationwide, UnitedHealth offered PPACA exchange plans in 34 states for the current year. If UnitedHealth left all those states’ exchanges, about 3 million exchange plan enrollees would see their choices reduced to just one or two insurers for next year, the Kaiser study shows. About 9 million people would still have three or more plans to pick from.

Insurers are currently telling regulators where they plan to offer exchange policies next year, and UnitedHealth hasn’t yet laid out its 2017 national strategy. UnitedHealth declined to comment on its plans ahead of its first-quarter 2016 financial results, which are scheduled to be released Tuesday.

PPACA gives many consumers subsidies to help them buy coverage, and those payments are based on the cost of the second-cheapest silver plans. Silver plans typically cover about 70 percent of an individual’s health care costs, though subsidies can raise that amount.

Cheapest silver

The U.S. Department of Health and Human Services (HHS) said the report shows that UnitedHealth plays a relatively small role in the exchange system. HHS has previously said it expects insurers to enter and exit the system each year, and that it expects the exchanges to “continue to thrive.”

Cox and Ashley Semanskee, a Kaiser research assistant, looked at places where a UnitedHealth exit would reduce competition to just one or two insurers and where the company offered one of the two cheapest silver-level plans. Overall, consumers have tended to enroll in those cheaper plans, Cox said.

Michigan should be able to endure the loss of United because the insurer only participates in seven of the state’s 83 counties, and it’s not among the cheapest in any of those counties, according to the Kaiser analysis. United also wasn’t offering cheap plans in Arkansas.

Tough market

In Georgia, however, the loss of UnitedHealth will cut the number of insurers to just one or two in about half of the state’s counties, though those counties account for just 11 percent of the state’s population. The insurer offered one of the cheapest plans in 34 of the state’s 159 counties.

Georgia has been a tough exchange market for some insurers. In 2015, it was one of the most unprofitable for UnitedHealth’s individual business, which includes products sold both through the state’s exchange and outside, including via brokers, according to Ana Gupte, an analyst at Leerink Partners. Humana Inc. (NYSE:HUM) also said last year it was weighing whether to exit the state’s exchange business, if it couldn’t turn its business around.

Still, a UnitedHealth-owned insurer called Harken Health will continue to sell in Georgia, mainly in the Atlanta area.

UnitedHealth was one of two insurers offering Obamacare exchange plans in Oklahoma this year, though few customers picked it, according to Kelly Dexter, a spokeswoman for the state’s insurance department. The company’s silver plans were more expensive than competing ones from BlueCross BlueShield of Oklahoma throughout the state, according to the Kaiser analysis.

Potential impact

Other states where UnitedHealth posted big losses in its individual business include Florida, North Carolina, New York, Alabama and Louisiana, Gupte said. She said UnitedHealth will probably take into account those losses as well as its 2017 outlook as it decides which states to exit.

If UnitedHealth left the New York exchange, every consumer in the state would still have at least three plans to pick from. Here’s what a UnitedHealth exit could mean in some other states, according to Kaiser’s analysis:

Alabama: Two-thirds of the state’s population would have just one choice of insurer, and the rest would have two. United offers one of the least-expensive plans in 66 of the state’s 67 counties. Louisiana: Consumers in most of the state would have just two health plans to pick from. UnitedHealth offered one of the cheapest plans in about three-quarters of the state. Florida: It’s the state with the most Obamacare enrollees. More than a third of them would have a choice of only one or two health plans if UnitedHealth exited.

There are caveats to the Kaiser analysis. For example, UnitedHealth could quit some counties in states, while remaining in others. Also, the analysis doesn’t account for what the rest of the industry does — other insurers could decide to enter new markets, filling the void left by UnitedHealth.

Still, UnitedHealth is far from the only insurer struggling with selling individual health plans, which includes PPACA exchange plans. Industry-wide, insurers spent $1.02 on medical care for every premium dollar they took in last year, meaning they lost even more money when administrative expenses are included, according to Brian Wright, an analyst at Sterne Agee CRT.

See also: 

PPACA World 2017: Don Goldmann looks ahead

PPACA 2017: Cigna might sell through Virginia exchange

   

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