UnitedHealth Group, the largest U.S. health insurer, has decided to call it quits in two state Obamacare markets in the latest challenge to President Barack Obama’s health-care overhaul.
The insurer won’t sell plans for next year in Georgia and Arkansas, according to state insurance regulators. Tyler Mason, a UnitedHealth spokesman, confirmed the exits and declined to say whether the company would drop out of additional states.
Many insurers have found it difficult to turn a profit in the new markets created by the Affordable Care Act, under which individuals turned out to be more costly to care for than the companies expected.
UnitedHealth and Aetna both posted losses from the policies last year, as did big Blue Cross and Blue Shield plans in states such as North Carolina.
UnitedHealth began warning in November that it might exit ACA markets as it racked up losses. In December, the company said it should have stayed out of the individual exchanges longer.
Leaving some state exchanges could help UnitedHealth boost its profits next year, Ana Gupte, an analyst at Leerink Partners, said Friday in a research note.
“Exits from unprofitable markets will act as a tailwind to earnings,” Gupte wrote. “We have more conviction in our view that there is upside” to UnitedHealth’s earnings estimates.
The ACA relies on private health-insurance companies to offer policies that individuals can buy in government-run markets. About 58 percent of consumers had fewer options in 2016 than the year before, while 31 percent had more choices, according to consulting firm McKinsey & Co.
UnitedHealth’s decision to stop offering ACA plans next year means that people who are currently enrolled with the insurer will have to choose a new health-insurance provider next year. It doesn’t affect their current coverage.
“As with any new market, we expect changes and adjustments in the early years with issuers both entering and exiting states,” Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said in an email. “The marketplace is a reliable source of coverage for millions of Americans with a robust number of plan choices.”
While UnitedHealth is the biggest carrier in the United States, with about 42 million medical customers, it has a smaller role in the ACA’s markets. The company had about 650,000 in individual exchange-compliant policies as of Dec. 31.
About 12.7 million people signed up for ACA coverage for this year, including about 587,800 in Georgia and 73,600 in Arkansas, according to CMS. The agency doesn’t disclose what insurers people picked.
In Arkansas, 544 people were enrolled in UnitedHealth ACA plans, according to Kenneth Ryan James, a spokesman for the state insurance department. He said Blue Cross and Blue Shield plans are dominant in the state.
UnitedHealth had an additional 5,923 members enrolled in private Medicaid policies tied to the ACA in Arkansas, James said. UnitedHealth is also exiting that business.
The Arkansas Democrat-Gazette reported earlier about UnitedHealth’s decision in that state.
Including UnitedHealth, Georgia has nine health insurers that offer ACA polices, according to Glenn Allen, a spokesman for the state’s insurance commissioner. Others include Aetna, Humana and Cigna. No other company has yet told Georgia that it is exiting its market, and companies have until May 11 to decide, Allen said.