UnitedHealthcare to pull out of state’s ACA market

April 20--UnitedHealthcare is pulling out of Pennsylvania's Affordable Care Act health insurance market next year, saying the carrier anticipates overall losses in the business line to exceed $1 billion for 2016 and 2015.

The Minnetonka, Minn.-based company only has a small slice of the Western Pennsylvania market, but one less provider of the government-subsidized coverage will mean higher rates for consumers as carriers try to recoup losses incurred by insuring people who previously did not have coverage, insurance brokers say.

On Monday, UnitedHealthcare said it was pulling out of Michigan's ACA online marketplace next year, the third state the carrier had dropped.

Average health care claims for ACA members exceed those in other plans by 18 percent, with limited opportunity for insurers to recoup those losses, according to Rick Galardini, chairman and CEO of Wexford-based brokerage JRG Advisors.

UnitedHealthcare, Highmark and other carriers have already trimmed or eliminated broker sales commissions to try to stem the red ink, Mr. Galardini said.

"The insurance companies really don't want their agents selling this stuff," he said. The loss of UnitedHealthcare will "tighten up the number of choices" in the market.

Dave Scott, vice president of Bethel-Park-based ARMS Insurance Group LLC, said UnitedHealthcare's leaving could prompt other carriers to do the same, driving up rates.

UnitedHealthcare anticipated losses of $500 million on its 2016 exchange business, which is offered in 34 states. But on Tuesday, CEO Stephen Hemsley said the company would only remain in a handful of states next year.

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 Foundation. The company offers one of the two lowest-cost silver plans in 14 Pennsylvania counties.

In a statement Monday, Aetna said no final decisions had been made about its 2017 exchange offerings. Highmark, the fourth-largest Blues plan in the country, is smarting from $590 million in ACA losses for 2015.

Highmark's losses were equal to $1.6 million a day in 2015, or $1.20 paid for member care for every premium dollar received.

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

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