UnitedHealthcare looked as if it had missed the boat last year when it chose to play in just a handful of states in the healthcare exchanges. But what a difference a year and some competitive pricing makes: Its exchange enrollment has grown by more than 2,700 percent -- to 570,000 -- now that it has a presence in almost half of the states? health insurance marketplaces for individuals.
While they expected strong uptake, even UnitedHealthcare executives were surprised by how well they did in 2015 exchange enrollment. The insurer went from being in only four state exchange markets to 23, and it priced products competitively in many cases. Its average premium for a 40-year-old was below the state average in more than half of states where it is on the exchanges, according to analysis by HealthLeaders-InterStudy. Six of those states where it beat the state average are among the largest in the country: Florida, Illinois, Michigan, North Carolina, Pennsylvania, and Texas. For example, United's average premium for a 40-year-old was $215 in Pennsylvania, almost 30 percent lower than the state average, and in Michigan, its average of $260 was 14 percent below the state average.
Of course a large chunk of UnitedHealthcare's growth likely came from members transferring from its old individual plans to the new exchange ones. UnitedHealthcare's net growth in fully insured commercial members (which includes the exchanges) was 275,000 from first quarter a year ago. Insurers could offer grandfathered plans that were available before 2010 and be exempt from some of the Affordable Care Act's rules, including having to provide preventive care without cost-sharing, offering the package of essential health benefits, and not capping benefits in a given year. The government allowed the exemptions to help insurers transition to the exchanges and enable members to keep current policies without big changes.
But even accounting for that overlap, 2015 is looking to be a very good year for UnitedHealthcare. Besides its growth in the fully insured market, its self-insured business was up by 45,000 members, to 21.3 million, and its Medicare Advantage and Medicaid membership were up by 220,000 and 750,000, respectively, over first-quarter 2014.
Last year UnitedHealthcare's measly 20,000 exchange members put it in 49th place in the country in that sector, far behind national, regional and even some brand-new nonprofit cooperative plans. It seemed a strange position for the largest insurer in the country. The insurer's biggest competitor, Anthem, captured the biggest share of exchange members last year (785,000) and likely retains that lead in 2015 (its first-quarter earnings call isn't until April 29).
While its competitors were testing the market, United was continuing to build its lower-price, narrow-network products for small and large businesses, and being very public about its plans to move to more value-based contracting with physicians and hospitals.
A decade ago HealthLeaders magazine did a cover story describing UnitedHealthcare as the quiet giant, an organization that kept a low profile but steadily built its empire. Last year UnitedHealthcare was again the quiet giant on the exchange front, biding its time and letting competitors make their mistakes before making its big move on the exchange market.
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