UnitedHealth's pullback from exchange business could hit rural counties

UnitedHealthcare's retreat from the exchange business could contribute to pocketbook pain for some rural consumers next year.

A study this month analyzed the Minnetonka-based health insurer's offerings on exchanges in 34 states, and concluded departures by UnitedHealthcare wouldn't make a big difference for premiums overall.

That's because UnitedHealthcare's prices aren't that low in many markets, and the insurer faces plenty of competitors in counties with large population centers.

But in some parts of the country, UnitedHealthcare is one of just a few options on the market. In most counties across Iowa and eastern Nebraska, for example, the benchmark plan for a 40-year-old would increase anywhere from $25 to $100 per month without UnitedHealthcare, said Cynthia Cox, a researcher with the Kaiser Family Foundation.

"There are certain areas, particularly rural counties and some southern states, where the impact on consumers will be more significant," Cox said. "That's because those areas will be left with limited insurer participation."

UnitedHealthcare, which is the nation's largest health insurer, announced last week that it would continue next year selling coverage through just a handful of exchange markets.

The exchanges are government-run online marketplaces launched for 2014 under the federal Affordable Care Act.

The law requires almost all Americans to have coverage or pay a tax penalty. The exchanges are an option for individuals and families buying coverage outside of employer groups and government insurance programs.

"This is a big deal because the largest, and arguably most successful, health insurer in the United States has found the Obamacare insurance exchanges untenable in their current form," wrote Robert Laszewski, a Virginia-based health care consultant, in an e-mail.

"Losing one carrier will have little impact on the market," Laszewski wrote. "But taken in conjunction with the fact that almost all of the health insurers operating in the exchanges are losing money, this is just part of a broader picture that says Obamacare is not sustainable in its present form."

That view isn't shared by everyone. UnitedHealthcare has about 6 percent of all exchange enrollees nationally, and hasn't been a big player in the individual market.

It would be a bigger blow to the exchanges if nonprofit insurers and those selling Blue Cross and Blue Shield coverage started dropping out in big numbers, said Stephen Parente, a health care finance expert, at the University of Minnesota.

Indianapolis-based Anthem Inc., the nation's largest for-profit operator of Blue Cross plans, said in a statement last week that it remains "committed to the public exchange market." Connecticut-based Cigna said it plans to selectively expand on the exchanges.

UnitedHealthcare and other national insurers don't sell coverage on MNsure, which is the exchange for Minnesota. Insurers in the state say they lost more than $300 million collectively last year in the individual market, which includes MNsure, but none talked about dropping out.

"There are some problems with the exchanges, and by that I mean with the risk pools, the pricing," said Dannette Coleman, a senior vice president with Minnetonka-based Medica, which sells exchange coverage in Minnesota and nearby states.

"I think it would be shortsighted to completely downplay watching one of the country's largest carriers exit exchanges," Coleman said. "Keep in mind, though, this is not the sweet spot of UnitedHealthcare."

Short of more insurers bolting, the near-term impact from UnitedHealthcare's move is likely limited to certain markets.

The insurer hasn't specified exactly which state exchanges it's leaving, so it's not clear, for example, whether United will keep selling in nearby Iowa and Wisconsin.

The Kaiser Family Foundation study this month assumed a complete withdrawal by UnitedHealthcare from the 1,855 counties where it currently sells exchange coverage.

In 1,068 of those counties a UnitedHealthcare exit would leave consumers with a choice of coverage from just one or two insurance companies.

In terms of premiums, however, the study found only a "modest" impact nationally because in most counties UnitedHealthcare does not offer the lowest or second-lowest price "silver" plan, which is the most popular type of coverage sold on exchanges. Where the company offers low-price coverage, it's often not significantly lower than competitors.

In Wisconsin, UnitedHealthcare's coverage on the exchange is relatively expensive, Cox said, so the impact on prices from a withdrawal could be minimal. Even so, there are several rural counties in northern and western Wisconsin where a United exit could leave consumers with just two choices — and just one choice in the case of Menominee County, which is east of Wausau.

Consumers might notice a United exit because the carrier tends to offer coverage with a broad choice of doctors and hospitals, Cox said. That's the issue foremost on the mind of insurance agent Kate Banchy of Spectrum Insurance Group in Eau Claire.

Local health plans in the market tend to steer patients to one of two competing health systems, Banchy said, so consumers hoped national carriers would provide a broader choice of providers.

"That is another sign that our major national carriers are saying: We're not finding this to be a good book of business for us," Banchy said.

In Iowa and eastern Nebraska, UnitedHealthcare operates in dozens of counties where it's one of only three insurance companies on the exchange and/or has some of the lowest prices, according to the Kaiser report.

Insurers have signaled that exchange premiums are likely to increase next year for reasons that aren't directly related to UnitedHealthcare's decision, Cox said, adding that a United departure in Iowa and Nebraska could add to pricing pressure.

Just down Interstate 35 from the Twin Cities in Mason City, Iowa, the lowest-price silver plan for a 40-year-old comes from United at a cost of $308 per month. United's only two competitors in the market sell for a monthly premium of $358 and $412, respectively.

Are people in Mason City worried?

Insurance agent Brenda Katalinich of Edwards-Brandt & Associates didn't sound too troubled. UnitedHealthcare's products haven't been that popular in Mason City, she said, because the coverage didn't include easy access to the Mayo Clinic, located about 90 miles away in Rochester, Minn.

Another factor is Wellmark Blue Cross and Blue Shield, the dominant carrier in Iowa's individual market. So far, Wellmark has stayed out of the state's exchange, but that's set to change next year.

"Wellmark is still actively planning for exchange participation for the 2017 plan year," the company said last week in a statement. "Our exchange participation … is not impacted by changes occurring with other carriers."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck