UnitedHealthcare Staying In Pennsylvania Exchange – For Now

April 18--Health insurance giant UnitedHealthcare announced that it is pulling out of the Michigan market next year in the face of mounting losses on the government subsidized line of business -- the third state that the carrier has dropped -- raising questions about the carrier's exchange plans in other states.

In addition to Michigan, UnitedHealthcare has withdrawn from individual marketplaces in Arkansas and Georgia.

If the insurer moves at some point to withdraw from Pennsylvania, it would have little impact in the western part of the state, according to David Scott, vice president of Bethel Park-based ARMS Insurance Group LLC, which is among the biggest United Healthcare agencies in the region.

Intense rate competition between Pittsburgh-based insurers Highmark and UPMC Health Plan in recent years has made it difficult for UnitedHealthcare to get traction, he said. In addition, UnitedHealthcare has offered a narrower network of health care providers than either Highmark or UPMC.

"For the most part, price is the competition," Mr. Scott said. "When you start comparing prices, people have chosen to go with Highmark or UPMC."

Still, Mr. Scott worried about the impact on rates if UnitedHealthcare decides at some point to pull up stakes.

"If or when they leave, my fear is other carriers may do the same, which would be bad for consumers," he said. "We need competition to help maintain stability, even if at the moment they aren't the first choice in Western Pennsylvania."

UnitedHealthcare, the biggest health care insurer nationally by membership, anticipated losses of $500 million on its 2016 exchange business, which it offers in 34 states. Other insurers have reported similar losses on the coverage.

Downtown-based Highmark, the fourth biggest Blue Cross and Blue Shield carrier in the country, on April 1 reported losing $1.6 million a day -- $590 million in all -- on its Affordable Care Act exchange plans in 2015, paying $1.20 in care for every premium dollar received.

"We are focused on the sustainability of our ACA plans and need to secure the rates necessary to keep the plans viable in the future," Highmark said in a statement Monday.

Insurers have blamed losses in the ACA market on higher than anticipated medical costs for many members who were not previously insured.

Neither Highmark nor UPMC plan to stop participating in Pennsylvania's exchange marketplace. "UPMC Health Plan welcomes the opportunity to provide coverage for the health insurance marketplace, regardless of changes in the market," the carrier said in a statement Monday.

Another competitor, Aetna, said no final decisions had been made about its 2017 exchange offerings.

"We are still in the process of evaluating the outlook for the marketplace in 2017 to help us make final decisions on where we will participate," the company said in a statement Monday.

Western Pennsylvania carriers have stopped paying broker commissions for ACA plan sales until 2017, a strategy intended to dampen sales of money-losing products without the carrier having to pull out of the market.

UnitedHealthcare has 289,131 ACA members in 23 counties of Pennsylvania, less than one-third of the 439,235 individual marketplace members statewide, according to a new study by the Henry J. Kaiser Family Foundation. The carrier offers one of the two lowest-cost silver plans in 14 Pennsylvania counties.

Kris B. Mamula: [email protected] or 412-263-1699.

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