UnitedHealth's decision to slash its participation in the Affordable Care Act's insurance exchanges shows how these still-new marketplaces remain unsettled heading toward their fourth year.
But customers in many markets, especially cities and other populated areas, should still have several options when they start shopping for 2017 coverage.
The nation's biggest health insurer said Tuesday that heavy losses were pushing it to limit exchange participation to only a handful of states in 2017 after expanding to 34 for this year. A company spokesman declined to be more specific on 2017 participation.
UnitedHealth covered 795,000 people through the exchanges as of the end of March, or roughly 6 percent of the 12.7 million total people who signed up for 2016 coverage through the ACA's public exchanges. UnitedHealth's announcement comes after nonprofit health insurance cooperatives created by the ACA reported deep 2015 losses and as other major insurers like Aetna have questioned the viability of the exchanges, which are a key element behind the ACA's push to expand insurance coverage.
Industry watchers say they expect other companies to also adjust their exchange participation as they put together their coverage plans for 2017. But they don't see UnitedHealth's move as the start of a mass exodus.
"I think insurers will have to become more selective in terms of which exchanges and how they participate, but by far and away I think the United move will be the biggest one this year," said Mizuho Securities Managing Director Sheryl Skolnick.
It's still too early to get a definite feel for how many choices consumers will have next fall when they start shopping for 2017 coverage. So far, UnitedHealth has decided to stay in exchanges in Virginia and Nevada but leave Arkansas, Georgia, Louisiana, Michigan, and Oklahoma. Other insurers may move into those marketplaces to replace it.
Generally, the number of choices a consumer has will depend on where the shopper lives, with insurers gravitating toward more populated areas.
"I think there's reason to believe we'll still have quite a few competitors in a lot of the areas where we had them last year," said Gary Claxton, a vice president with the Kaiser Family Foundation, which studies health care issues.
Nearly 9 in 10 people who had coverage in 2015 had a choice of three or more insurers when they shopped for 2016 plans on a federally run exchange, according to the U.S. Department of Health and Human Services, which noted that the exchanges saw plenty of insurer turnover for 2016 too.
HHS says 39 health insurers left a marketplace for 2016 coverage while 40 entered one.
Spokesman Ben Wakana said the government expected insurers to enter and leave exchanges in their early years, and they have confidence that the new marketplace "will continue to thrive for years ahead."
Health insurers have faced several challenges in building their exchange business. Their initial wave of customers generated higher-than-normal claims in part because some of the uninsured had not used the health care system for years and were waiting for coverage to help pay for needed care.
Insurers also have struggled in many markets to add younger consumers who don't use as much health care and could balance those more expensive patients. Insurers say they also have been hurt by expensive patients who sign up outside regular enrollment windows.
UnitedHealth Group Inc. said Tuesday that it expects to lose $650 million this year on its exchange business, up from its previous projection for $525 million. The insurer lost $475 million in 2015. CEO Stephen Hemsley told analysts during a Tuesday morning conference call that his company will not carry into 2017 financial exposure from the exchanges, which represent a small slice of its overall business.
"We continue to remain an advocate for more stable and sustainable approaches to serving this market," he said.