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UnitedHealth Plans to Leave California’s Insurance Exchange

According to state officials, UnitedHealth Group Inc. will be leaving California’s insurance exchange at the end of this year. UnitedHealth is the largest health insurer in the nation. They have decided to drop out of all but a few of the 34 health insurance marketplaces that it was participating in. They have yet to discuss their plans in California and their existing policies will remain in effect until the end of the year.

UnitedHealth will most likely continue to offer coverage to California employers as well as to government workers and their families via the California Public Employees’ Retirement System. Stephen Hemsley, the Chief Executive of UnitedHealth, released a statement back in April announcing that the company was no longer willing to keep losing money on the health insurance exchange business. He claimed that UnitedHealth would not be able to serve the market on an effective and sustained basis because of the smaller size and the short-term, high-risk profile of the market segment.

UnitedHealth had only joined the California exchange this year. This means that their withdrawal will not have too big of an impact considering that they only had 1,200 enrollees. According to the California Department of Managed Health Care, as of April 27th, UnitedHealth did not have any individual policyholders that existed outside of the exchange. However, critics of the Affordable Care Act are using the insurer’s exit from California, which is a high-profile state, as evidence that health-law insurance exchanges are not financially sustainable. This claim has been rebuked by the President’s administration, who have pointed out that the number of health plans that offer exchange policies have actually increased since they launched back in 2014.

There are around 1.4 million people enrolled in the state’s insurance exchange — and unlike other states, large insurance companies have reported profits from selling on California’s marketplace in part because they have one of the healthiest risk pools in the nation. For additional information about the state of the health insurance industry in California or for all health insurance–related news, be sure to visit us at the Benefits Store today.


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