There’s a dedicated team of officials and activists who are always on the lookout for bad news about the Affordable Care Act. This week, they seemed to find some.
UnitedHealth Group, the nation’s largest private insurer, announced Tuesday that next year, it would scale back its participation in ACA exchange marketplaces. Starting in 2017, UnitedHealth will be “down to a handful of states.”
“A ha!” anti-healthcare forces declared. “We knew it! The market is failing! Obamacare is a disaster! We were right all along!”
They should probably take a deep breath, because while the UnitedHealth announcement certainly isn’t good news, it’s not evidence of a crisis, either.
The Washington Post article on this highlighted a report from the Kaiser Family Foundation that found the impact on consumers is likely to be relatively modest: “Even if United exited all states, most marketplace enrollees would still have the ability to choose between three or more insurers. An average health plan used as a benchmark would be about 1 percent more expensive if United had not participated in 2016.”
But what about what this says about the larger system? TPM’s Tierney Sneed reported yesterday that this week’s announcement is “not the sky-is-falling, death-spiral fever dream that conservatives are making it out to be.”
For one, while UnitedHealth is indeed the nation’s largest insurer, it is a relatively small player on the individual exchanges…. Furthermore, UnitedHealth decided to sit out the first year the marketplaces were in operation, meaning it has had one fewer year than its competitors to game out pricing according to its risk pools. […]In general, UnitedHealth was offering plans in many states more expensive than other companies, the Kaiser report noted, and what has become clear in the first few years of ACA implementation is that consumers are willing to shop around for the cheapest deal.UnitedHealth pricing issues could be partly attributed to the fact that the insurer is more geared to broad-network plans, and the cheaper, narrow-network offerings have been more successful on the individual marketplaces.
These relevant details suggest the latest “Obamacare crisis” really isn’t much of a crisis.
Caroline Pearson, a senior VP of Avalere, a healthcare consultancy firm, told TPM there’s ample reason to keep a close eye on how insurers are approaching the exchanges, “but there’s no reason to think that these markets are collapsing.”
It’ll be worth watching how other insurers respond, but let’s note for context that Cigna said this week it not only intends to continue its participation in the marketplaces, it also plans to expand “into a few new geographies in 2017.”
* Correction: The quote from Caroline Pearson was originally attributed incorrectly to Clare Krusing, a spokeswoman for the America’s Health Insurance Plans. The above text has been edited accordingly.