After largely exiting the Affordable Care Act exchanges a few years ago amid big profit losses, UnitedHealthcare is weighing whether to expand to new regions for 2021 coverage.
The admission comes as the nation's largest private health insurer acknowledges more members are struggling to pay their monthly commercial health insurance premiums as American workers are laid off or forced to take furloughs in the economic fallout of the novel coronavirus.
"What you can count on is we'll make no snap reactions to this situation in terms of making strategic decisions about going into markets. But we have given this considerable thought leading up to this crisis and through it all," David Wichmann, CEO of UnitedHealth Group, said during a Wednesday first quarter earnings call.
As the marketplaces opened, some insurers were more successful or profitable than others. UnitedHealthcare, which is known for its commercial group coverage, stumbled as it tried to offer similar robust network offerings as its group plans. The payer then scaled back its offerings beginning in 2017, citing losses. Aetna and Humana also exited the exchanges in 2018.
Now, with the economy reeling and millions facing job losses and with it the loss of their commercial coverage, the exchanges may look more appealing.
"UnitedHealth might be trying to follow some of their employer market customers onto the exchange, or they might have already been considering re-entering as it has become a more profitable market," Cynthia Cox, vice president at the Kaiser Family Foundation, told Healthcare Dive.
Scott Fidel, managing director and analyst with Stephens, sought to gauge the insurer's appetite for re-entering the ACA markets the company had previously exited on Wednesday's earnings call.
"We began to look at participating in more exchanges prior to the COVID-19 crisis," Dirk McMahon, CEO of UnitedHealthcare, said. "We're still in the process of going through market by market, evaluating relative efficiency of our network, our ability to compete, and states where we would like to extend Medicaid."
Currently, UnitedHealthcare offers individual exchange plans in three markets: Massachusets, New York and Nevada. That's a substantially smaller footprint than its presence in 34 states, or more than 3,100 counties, in 2016, according to a previous analysis from the Kaiser Family Foundation.
McMahon said he would be able to provide a more "hardened view" of the company's intentions on the next earnings call.
The ACA ushered in a new market where people could shop for coverage if they didn't have access to job-based coverage. The newly created market offered consumer protections by forbidding insurers from denying coverage because of pre-existing conditions and required carriers to provide a basic set of coverage. It also provides subsidies, or financial help for those under a certain income threshold.
While bigger players fled, some Medicaid managed care providers such as Centene, used to providing limited networks, were more successful.
Over the years, the marketplace has become more profitable, which may explain, at least in part, UnitedHealthcare's possible return, Cox said.
"In fact, last year there were record high rebates as insurers were essentially 'too profitable' under the ACA medical loss ratio rules, and we're expecting to see another year of large rebates even in the absence of the individual mandate penalty," Cox said.
However, it will be a gamble, she said, as claim costs will be hard to predict next year due to COVID-19.