Five years after largely exiting ACA markets, UnitedHealthcare to expand in more state exchanges

UnitedHealthcare is seeking regulatory approval to begin selling coverage to individuals in four new states in 2023, expanding the insurer's return to a market it largely abandoned five years ago.

Currently, the Minnetonka-based carrier is selling the coverage in 18 states through government-run health exchange marketplaces that were launched under the federal Affordable Care Act (ACA).

UnitedHealthcare confirmed in an email to the Star Tribune that it hopes to start doing so in four more states next year — Kansas, Mississippi, Missouri and Ohio.

"We will add these markets, pending regulatory approval," a company spokesman wrote.

UnitedHealthcare mentioned the 2023 growth plan in a Sept. 1 notice to health care providers about new prior authorization codes that was reviewed by the Star Tribune.

Beginning in 2014, the ACA brought sweeping changes to the market where coverage is sold to individuals — typically people under age 65 who are self-employed or don't get health plan benefits from their employer.

The law created the health exchanges, where consumers tap federal tax credits that discount premium costs, and it also imposed requirements for comprehensive benefits.

In November 2015, UnitedHealthcare, which is the nation's largest health insurer, sent shock waves through the market with pessimistic comments about the product category from Stephen Hemsley, the chief executive at the time of parent company UnitedHealth Group.

"We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself," Hemsley told investors.

The company's negative outlook was significant because the federal health law relies on competition among private insurers to control the cost of coverage.

With losses of $1.3 billion during a two-year period, UnitedHealthcare decided to largely abandon the market. The company went from selling health plans through exchanges in 33 states during 2016 to just five states in 2017 and then two states in 2018.

Since then, several states — including Minnesota — have taken steps to attract carriers to the market with government-funded reinsurance programs. As the market has stabilized, carriers have started to see a path for profitable growth in selling ACA-compliant coverage to individuals.

In recent years, Minnetonka-based Medica, Bloomington-based Bright Health and others have significantly grown membership in the individual market across multiple state markets.

During the last two years, individual market coverage has grown with enhanced federal tax credits for individuals under the American Rescue Plan Act. Those subsidies were extended by federal legislation this year.