UnitedHealth is the country's largest health insurer. And on Thursday, it dropped a bombshell: The company told investors that it may withdraw from the Obamacare marketplaces due to poor financial performance.
Chief executive Stephen Hemsley told investors that United would decide in early 2016 whether to sell on the marketplaces the following year. "We cannot sustain these losses," he said. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."
What, exactly, would that mean for Obamacare? I used data from the Kaiser Family Foundation to map the states where United had the biggest individual market presence in 2013. This is prior to Obamacare, but still is a good sense of the states where the company had a robust individual market presence in the lead-up to the health insurance expansion. You can see below that some states, particularly Nevada, would experience massive disruption if United pulled out of the marketplaces.
United insures 46 percent of Nevadans using Obamacare
Overall, United does not have an especially large chunk of the Obama market. The health data firm Avalere estimates that United covers 550,000 Obamacare enrollees — about 5.6 percent of the 9.9 million people who rely on the law for private coverage.
That figure, however, likely masks huge state-to-state variation.
In 2013, there were 28 states where United is among the three largest insurers on the Obamacare marketplace. In 18 states, it has more than 10 percent of the market — and in six states, it has more than 20 percent of the market. United is most dominant in two states: Nevada, where it has 46 percent of all Obamacare enrollees, and New York, with 30 percent of Obamacare enrollees there.
If United presence in the marketplace has remained similar to what it looked like prior to the law, a United withdrawal could prove incredibly disruptive for Obamacare. It would mean that hundreds of thousands of people have to shop for new carriers and switch plans. Other, smaller plans would have to figure out ways to absorb all those people.
But in the long term, United pulling out of Obamacare might signal something even more troubling: that the marketplaces aren't a good business decision for other large carriers.
Right now, that doesn't seem to be the case. Other large insurers like Aetna have said they don't forecast any change in their participation in Obamacare. But if the United statement causes them to reconsider — and they do start wondering whether the Obamacare exchanges are a good business proposition — that could have catastrophic consequences for the law.
Correction: An earlier version of this story misdescribed the data in this story. It represents 2013 individual market insurer marketshare, the year prior to the Obamacare insurance expansion.