Filed Under:Health Insurance, Individual Health

UnitedHealth may expand exchange presence

The 2015 exchange market chessboard is just starting to appear. (TS)
The 2015 exchange market chessboard is just starting to appear. (TS)

(Bloomberg) -- UnitedHealth Group Inc. (NYSE:UNH) -- a company that was leery of the new Patient Protection and Affordable Care Act (PPACA) health insurance exchange system – may sell plans through exchanges in several states for the first time in 2015.

The company has filed exchange “qualified health plan” (QHP) forms in Washington state and Virginia.

United also could sell coverage through the Indiana exchange, under the Allsavers brand name, according to the Indiana Department of Insurance.

UnitedHealth now sells QHPs through just five exchanges.

See also: Escape from PPACA

Some other insurers also seem likely to sell QHPs through exchanges where they are now off the menu.

In Washington state, three of UnitedHealth’s competitors are planning to sell QHPs through the exchange for the first time.

In Virginia, a local health plan owned by a hospital and physicians in Lynchburg is planning to sell coverage through that state’s exchange, which is run by the U.S. Department of Health and Human Services (HHS).

In Indiana, another state with an HHS-run exchange, the number of carriers selling exchange QHPs could increase to eight, from four this year.

It’s not yet clear what will happen to exchange QHP competition in other states.

This year, for example, the HHS-run exchanges in Alabama, Mississippi and West Virginia offer plans from only one or two companies. Form filings for the 2015 exchange QHP market were not immediately available.

HHS officials say 8 million people have selected QHPs through the PPACA exchange system.

Exchange QHPs could cover 13 million people in 2015, officials say.

“There was a lot of anxiety about how things were going to go the first year and about how many people were going to enroll, particularly after the wobbly launch,” said Timothy Jost, a law professor at Washington & Lee University. “I think the insurers are feeling like this is a gamble worth betting on.”

“We have stated that moving into 2015 we do have a bias to increase our exchange participation as we view the size of the overall markets as positive and see long-term growth opportunities,” Tyler Mason, a spokesman for UnitedHealth, said in an e-mail. “We are continuing to evaluate each exchange on a state-by-state basis to assess how best to serve people as exchanges continue to mature and develop.”

Jost, who is a consumer representative to the National Association of Insurance Commissioners, said new competition should mean lower premiums for consumers, or at least more moderate increases. In Washington state, Molina Healthcare Inc. (NYSE:MOH), which offered relatively expensive plans this year, has proposed an average 6.8 percent reduction in its 2015 premiums.

“Consumers benefit from competition,” Karen Ignagni, the president of America’s Health Insurance Plans, said in an interview. “The most important thing is getting folks on the playing field offering different products to consumers so they can make the decisions that are best for them.”

Among all the plans selling to individuals in Washington state, the proposed rate increases average about 8.25 percent, said Mike Kreidler, the state’s insurance commissioner. That’s the lowest requested increase in seven years, he said; final rates may be lower.

Within Washington, competition will vary. While the new entrants would bring the number of companies on the state’s exchange to 12, they aren’t required to sell their plans statewide. UnitedHealth plans to sell coverage across the state, Richard Onizuka, the chief executive officer of the Washington Health Benefit Exchange, said in a phone interview.

“Some of them are very small and in only a few counties,” Onizuka said in a phone interview. “I think we did really well last year in that all the counties had at least two plans. I assume it’s just going to get better.”

Insurers that sat out from a state’s exchange in 2014 and plan to enter next year may benefit. Some expects the consumers who buy exchange QHPs in the second exchange program year to be younger and healthier, and more motivated by a desire to avoid the PPACA “shared responsibility” penalty payment than an immediate need for health coverage.

The penalty for most affected taxpayers is set to increase to 2 percent of income for the 2015.

“There’s the so-called second mover advantage,” Jay Angoff, a former Missouri insurance commissioner and former Obama administration official, said in a telephone interview. “The second year, new carriers come in because they conclude that people in the worst health are going to stay with their existing plans and therefore they’re going to get a better mix of risk.”

The benefits for consumers and insurers may not be seen equally across the country. In West Virginia, for example, only Highmark Inc., a nonprofit Blue Cross Blue Shield company based in Pittsburgh, sold plans on the exchange this year, according to ValuePenguin, which tracks exchange offerings. With an older and sicker population than the nation as a whole, West Virginia presents a higher risk for competitors.

“There are some states where there’s no competition at all,” Jost said. “For those states, it’s really important that we get competitors.

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