AgileHealthInsurance Report | 12-01-2015

Obamacare Premiums to Rise if UnitedHealthcare Exits Government Exchanges

Unsubsidized premiums for least expensive metal plans to rise between 6 percent and 19 percent in coverage areas where UnitedHealthcare sells the least expensive plans



UnitedHealthcare, the largest health insurer in the United States, recently warned that it would consider leaving the Obamacare exchanges after 2016 due to the poor financial performance of its Obamacare exchange plans. Low Obamacare enrollment by healthy people and heavy health care usage by enrollees are factors contributing to the poor financial performance of UnitedHealthcare’s Obamacare marketplace plans. UnitedHealthcare also cited high costs for people that enrolled in Obamacare plans during special enrollment periods and then quit the coverage after they received certain procedures.1

In order to determine how UnitedHealthcare’s exit could impact the choices for consumers on HealthCare.gov, AgileHealthInsurance analyzed the costs for on-exchange Obamacare plans from UnitedHealthcare and other insurers in the 38 states that use HealthCare.gov. Costs were examined for Obamacare plans in each metal level except for platinum plans, since UnitedHealthcare does not sell platinum plans on HealthCare.gov in 2016.

Bronze plans are the least expensive type of Obamacare metal plan, and they typically pay 60 percent of covered costs for a standard enrollee population. For Obamacare enrollees without financial assistance, bronze plans were the most popular type of Obamacare metal plan during the 2015 open enrollment period.2 UnitedHealthcare sells bronze plans in 47 percent of the coverage areas on HealthCare.gov,3 and UnitedHealthcare sells the least expensive bronze plans on HealthCare.gov in 21 percent of the coverage areas where UnitedHealthcare sells plans.4

In the coverage areas where UnitedHealthcare sells the least expensive bronze plan, the unsubsidized price of the least expensive bronze plan would go up 6 percent if UnitedHealthcare exits Obamacare exchanges. In dollars, the monthly price of the least expensive bronze plan would go up by the following amounts for each age if UnitedHealthcare exits the exchanges.

Average Monthly Price Hikes for Least Expensive Bronze Plans if UnitedHealthcare Exits Obamacare Exchanges

  • Age 30: $15.90
  • Age 40: $17.91
  • Age 50: $25.03
  • Age 60: $38.03

Silver plans are the most popular type of Obamacare plan. Over 8 in 10 individuals with a plan selection on HealthCare.gov qualified for financial assistance, and 74 percent of people with financial assistance on HealthCare.gov selected a silver plan during the 2015 open enrollment period.6 Silver plans typically pay 70 percent of covered costs for a standard enrollee population, and UnitedHealthcare sells silver plans in 47 percent of the coverage areas on HealthCare.gov.7 In 36 percent of the coverage areas where UnitedHealthcare sells plans on HealthCare.gov, UnitedHealthcare sells the least expensive silver plan.8

In the coverage areas where UnitedHealthcare sells the least expensive silver plan, the unsubsidized price of the least expensive silver plan would go up 10 percent if UnitedHealthcare exits Obamacare exchanges. In dollars, the monthly price of the least expensive silver plan would increase by the following amounts for each age if UnitedHealthcare exits the exchanges.

Average Monthly Price Hikes for Least Expensive Silver Plans if UnitedHealthcare Exits the Obamacare Exchanges9

  • Age 30: $26.41
  • Age 40: $29.74
  • Age 50: $41.57
  • Age 60: $63.16

Gold plans have been far less popular than bronze and silver plans on the Obamacare exchanges. Although 19 percent of enrollees without financial assistance on HealthCare.gov selected a gold plan, only 5 percent of enrollees on HealthCare.gov with financial assistance selected a gold plan.10 Gold plans typically pay 80 percent of covered costs for a standard enrollee population, and UnitedHealthcare sells gold plans in 47 percent of the coverage areas on HealthCare.gov.11 In 50 percent of the coverage areas where UnitedHealthcare sells plans on HealthCare.gov, UnitedHealthcare sells the least expensive gold plan.12

In the coverage areas where UnitedHealthcare sells the least expensive gold plan, the unsubsidized price of the least expensive gold plan would go up 19 percent if UnitedHealthcare exits Obamacare exchanges. In dollars, the monthly price of the least expensive gold plan would increase by the following amounts for each age if UnitedHealthcare exits the exchanges.

Average Monthly Price Hikes for Least Expensive Gold Plans if UnitedHealthcare Exits the Obamacare Exchanges13

  • Age 30: $60.84
  • Age 40: $68.50
  • Age 50: $95.74
  • Age 60: $145.47

Conclusion

If UnitedHealthcare exits the Obamacare exchanges, then the least expensive bronze, silver, and gold plans in many coverage areas will no longer be available on HealthCare.gov. In coverage areas where UnitedHealthcare sells the least expensive Obamacare plans, unsubsidized premiums for the least expensive bronze, silver, and gold plans would rise between 6 percent and 19 percent, depending on the metal level.

According to a recent survey by Deloitte, only 30 percent of all Obamacare marketplace enrollees are satisfied with their current plan, and the main reason for the dissatisfaction is paying too much for insurance.14 If UnitedHealthcare is not a participant on the Obamacare exchanges after 2016, then consumers will have even fewer choices for low-cost Obamacare plans in 2017 and later years.

For consumers that would lose their health insurance plans if UnitedHealthcare exits the Obamacare exchanges, there are other less expensive alternatives for health insurance. Term health insurance would be less expensive than any available Obamacare plan, even including Obamacare premium subsidies and the cost of the uninsured penalty, for many consumers. It is recommended that consumers compare costs for Obamacare plans, term insurance plans, and any other available health plans to determine what would be the least expensive option for their personal health care needs.

Methodology

Costs for Obamacare metal plans from UnitedHealthcare and other insurers were examined in the 38 states that use HealthCare.gov for the 2016 plan year. Data on 2016 Obamacare plans is from the 2016 QHP landscape file for the individual medical market, as well as the 2016 landscape files for the individual medical markets in NM, NV, OR, and HI. This analysis assumes the accuracy of the underlying government data.

  1. Nathan Bomey, Insurers’ stocks rebound after UnitedHealth’s Obamacare letdown. USA Today. November 20, 2015. http://www.usatoday.com/story/money/2015/11/20/unitedhealthcare-unitedhealth-group-obamacare/76097582/
  2. 35 percent of enrollees without financial assistance selected a bronze plan, with silver plans in second place at 32 percent. Health Insurance Marketplaces 2015 Open Enrollment Period: March Enrollment Report. ASPE. March 10, 2015. http://aspe.hhs.gov/sites/default/files/pdf/83656/ib_2015mar_enrollment.pdf
  3. UnitedHealthcare sells bronze plans in 1,214 of the 2,602 counties on HealthCare.gov.
  4. In 257 of the 1,214 counties (21%) where UHC sells bronze plans, UHC sells the least expensive bronze plan.
  5. Average price hikes only include counties where UnitedHealthcare sells the least expensive bronze plan.
  6. Health Insurance Marketplaces 2015 Open Enrollment Period: March Enrollment Report. ASPE. March 10, 2015. http://aspe.hhs.gov/sites/default/files/pdf/83656/ib_2015mar_enrollment.pdf
  7. UnitedHealthcare sells silver plans in 1,214 of the 2,602 counties on HealthCare.gov.
  8. In 441 of the 1,214 counties (36%) where UnitedHealthcare sells silver plans, UnitedHealthcare sells the least expensive gold plan.
  9. Average price hikes only include counties where UnitedHealthcare sells the least expensive silver plan.
  10. Health Insurance Marketplaces 2015 Open Enrollment Period: March Enrollment Report.
  11. UnitedHealthcare sells gold plans in 1,214 of the 2,602 counties on HealthCare.gov.
  12. In 608 of the 1,214 counties (50%) where UnitedHealthcare sells gold plans, UnitedHealthcare sells the least expensive gold plan.
  13. Average price hikes only include counties where UnitedHealthcare sells the least expensive gold plan.
  14. Public health insurance exchanges. Deloitte. http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-hix-consumer-survey.pdf

AFFORDABLE CARE ACT TAX. Term health insurance is health insurance outside of the Affordable Care Act ("Obamacare"). It does not include all ten of the minimum essential benefits of Obamacare and it does not cover pre-existing conditions. To learn more about the tax, its exemptions, and how to calculate the affordability of term health with the tax, see here. To learn more about the differences between Term health insurance and Obamacare, see here.