Will Insurance Companys Exit From ACA Affect

Consumers?
By Susan Dooley

In April, UnitedHealth Group withdrew from the Affordable Care Act exchanges in Michigan, Arkansas,
Connecticut, and parts of Georgia, with plans to exit exchanges in most of the other states where it
offers ACA plans by 2017. In 2016, UnitedHealth participated in ACA marketplaces in 34 states, offering
one of the two lowest-cost silver plans, which are the most popular options.

UnitedHealths Withdrawal Could Affect Competition, Premium Cost

Why is this important to healthcare reform? According to the Henry J. Kaiser Family Foundation, both
insurer competition and monthly premiums could be affected. However, UnitedHealths departure will
have only modest effect nationally on premiums, the Kaiser Foundation noted, because the companys
plans are often not the lowest cost option. If UnitedHealth plans had not been available in 2016, the
weighted national average monthly premium for the second lowest-cost silver plans would have cost
about $4 per month more for a 40-year-old.
The Kaiser Foundation also noted that some markets would be left with fewer choices and less
competition with UnitedHealths withdrawal. However, the Foundation continued, the majority of
The Coding Institute LLC, 2222 Sedwick Road, Durham, NC 27713, Eenterprise Contact: Sam Nair, Direct: 704 303 8150,
shyamn@codinginstitute.com

counties and ACA marketplace enrollees 8.9 million of them could continue to have a choice of
three or more insurers.
But Rob Palmer, Vice President of Government Relations at WPS Health Insurance, contends that
UnitedHealths pull-out puts the ACA in danger. UnitedHealth is hardly alone in the fact that it has lost
money by participating on the ACA exchanges and hardly alone as it considers withdrawing from the
exchanges, wrote Palmer.

Understanding a Health Reform Concept: Medical Loss Ratio

How are health insurers losing money, you ask? Palmer points to medical loss ratio, or MLR. By
definition, MLR is the percentage of premium that an insurer spends on medical benefits, as opposed to
company expenses like overhead and profit. For example, if an insurance company collects $100 in
premium and pays out $90 in medical benefits, its MLR is 90%, leaving the remaining 10% ($10 in this
case) to pay for overhead and profit. One of the health reform features of the Affordable Care Act
requires most insurance companies to have a minimum MLR of 80%, spending at least 80% of their
premium income on healthcare claims and quality improvement.
The problem, Palmer says, is that MLR is approaching 100% in some individual markets, which means
that those insurers are losing money. The more MLR rates rise, the more insurers will be forced out of
the exchanges, he asserts.

What Do You Think?

Have you had much experience with ACA-based plans in your practice? Let us know!

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Direct: 704 303 8150

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The Coding Institute LLC, 2222 Sedwick Road, Durham, NC 27713
The Coding Institute LLC, 2222 Sedwick Road, Durham, NC 27713, Eenterprise Contact: Sam Nair, Direct: 704 303 8150,
shyamn@codinginstitute.com