United Healthcare Health Insurance Staying in Nevada

Health Insurance NewsUnited Healthcare will soon curtail its participation in the federal health care system.

Their reason for this is simple: They are losing too much money.

United Healthcare currently competes in Affordable Care Act exchanges in 34 states, one of which is California. In January of 2016, however, the health insurance giant announced losses of $720 million on its individual polices under these government-run exchanges. As a result, by 2017 it should be competing in just three states: New York, Virginia and Nevada.

While the news may be unwelcome to some, it should come as no surprise. United originally signaled its pullback plans in 2015. By April of 2016, it had announced its decision to cut back to what it referred to as no more than a “handful” of states. At that time, the company went into no further detail, waiting until June of 2016 to clarify its intentions.

What does this mean to everyday seekers of health care in Nevada? If all goes as UnitedHealth plans, will they benefit or suffer?

The Good, the Bad and the Unsustainable

Launched under the umbrella of the federal government’s Affordable Care Act, the health care exchanges give people the ability to access health insurance apart from what they would otherwise obtain through government programs or from their employers. They came into being because under the ACA, the majority of Americans must obtain health coverage or pay the piper at tax time.

Each state participates in the program in its own way. Only 13 offer purely state-based exchanges. Others run on federal platforms; rely on federal facilitation; or participate in state-based small business health option marketplaces or partnership exchanges. Many put forth hybrid plans combining one or more of the possible options. Nevada, for its part, is one of only four states that base their exchanges on the federal technology platform.

The Problems with Health Care Exchanges

Following major technical glitches in the original rollout, numerous entities and individuals have had ongoing issues with the ACA. Many individuals and insurers alike find the exchanges to be unfair and unworkable. That is because participation requires carriers to not only accept all comers but also charge identical premiums to each applicant regardless of the status of his or her health. While the arrangement does allow insurers to profit on the healthy, it dooms them to suffer losses on the sick. Any carrier that wants to survive must often raise its deductibles while restricting the size of its networks.

Even more harmful for many is the ACA’s mandate to accept all candidates regardless of any pre-existing conditions. This allows an individual to purchase low levels of coverage while still young and healthy and switch to a higher-cost plan after receiving the diagnosis of an expensive, high-maintenance disease. The practice hurts insurers who rely on premiums from the healthy to help them to stay afloat.

Is the ACA’s Future Under Attack?

Many observers see United Health’s action as the tip of an iceberg signaling industry-wide problems under the ACA. Although consumers will still have the option to choose, many will face rising premiums while others will find creative ways of opting out altogether. Overall, some insurers continue to face financial losses.

However, the loss of one carrier alone does not necessarily doom the entire system. The truth is that the marketplaces account for only a small part of United Health’s overall revenue. Insurers who do the greatest part of their business through the exchanges will find themselves hard-pressed to simply walk away. At this point in time, no other carriers seem eager to follow United Health’s example.

What United Healthcare’s Pullback Means to Nevada Residents

While United Healthcare did suffer monetary losses in the majority of states in which it participated in the exchange, Nevada emerged as one of the few in which it posted a profit. United Health will therefore continue offering coverage to state residents during 2017 through the Nevada Health Link exchange. A company representative has confirmed United Healthcare’s continued participation in Nevada enrollment through the carrier known as Health Plan of Nevada, Inc., or HPN. Seekers can, however, expect a change in premium rates which is likely to range from a low of 8.1 percent to a high of 10.4 percent. The latter figure awaits the approval of federal regulators.