Insurers could be choosy on health exchanges - Omaha.com
Published Sunday, January 20, 2013 at 1:00 am / Updated at 6:31 pm
Insurers could be choosy on health exchanges

The leader of the nation's largest health insurer is warning not to assume widespread participation from his company in part of the health care overhaul's coverage expansion that unfolds later this year.

UnitedHealth Group Inc. CEO Stephen Hemsley told analysts Thursday that the insurer's involvement in online exchanges that are expected to help millions buy coverage will depend on whether it's financially viable for the company.

“We will only participate in exchanges that we assess to be fair, commercially sustainable and provide a reasonable return on the capital they will require,” he said.

These exchanges are expected to start accepting enrollment this fall for coverage that begins in 2014. Customers will use the websites, which will vary by state, to compare policies and apply income-based tax credits toward their bills. Many details on the exchanges have yet to be worked out.

But Hemsley estimated that UnitedHealth will participate initially in roughly 10 to 25 exchanges, when at least 100 might be set up.

“In a perfect world, we would participate in them all,” he said, adding that the insurer will keep evaluating exchanges.

These exchanges will target individuals and people who have coverage through small employers. The consulting firm PricewaterhouseCoopers has estimated that they will generate $50 billion in premiums for the industry and at least 11 million customers by next year.

But insurers will have to spend money to make that money. The overhaul will impose taxes and fees on insurers, and it introduces some restrictions on how they can set premiums or the price of coverage.

Insurers, who are not required to participate in the exchanges, also will have to design plans that fit the requirements for each state exchange and build networks of health care providers.

“There is a significant risk ... that if the economics on the exchanges are not favorable, they're simply not going to participate,” said Sheryl Skolnick, an analyst who covers insurers for the institutional broker and dealer CRT Capital Group.

That could affect the premiums people pay for coverage. Proponents of the overhaul say the exchanges will help restrain premium hikes because insurers will be competing against each other as customers compare policies side by side.

UnitedHealth competitor WellPoint Inc. said it is planning to be on exchanges in all 14 states in which it sells plans with its widely known Blue Cross Blue Shield brand. But a company spokeswoman said in an email the insurer wants to see exchanges that emphasize competition and maximize choice for customers.

Whether insurers ultimately leave some exchanges thin on competition remains to be seen.

Wells Fargo analyst Peter Costa said every company will weigh the risks of participating in those exchanges against potential benefits. But too many details about the exchanges remain unknown to say how those deliberations will pan out.

Morningstar analyst Matthew Coffina expects widespread insurer participation.

He noted that some companies will lose business to the exchanges, so they will need to be on them to recapture it. He also noted that government officials will want credible companies like UnitedHealth or WellPoint on their exchanges.

“I think regulators are aware of that, so they'll want to offer rules and terms that are attractive enough to attract a robust participation,” he said.

Lyft launches tonight in Omaha; police won't ticket drivers while service is free
Omaha senator seeks minimum wage ballot measure
Omaha's Straight Shot Accelerator announces companies in its 2nd class
Cabela's 1st-quarter sales down 21 percent as gun, ammo sales dip
Kelly: Started at a dining room table, Home Instead thriving at 20 with $1B in annual revenue
Hy-Vee opens its first Omaha Market Cafe
Omaha's Eppley Airfield sees increased demand — and that means more fare options for travelers
Construction to start in May on West Broadway apartment/retail structure
No 'bear' qualifies to ask Warren Buffett questions at this year's Berkshire meeting
Omahans start their workday earlier than most, at 7:48 a.m.
Omaha Hall of Fame inductees share stories of their lives in business
Warren Buffett says Coca-Cola pay plan 'excessive'
Earnings roundup: Apple plans more stock buybacks, will split stock in June
In brief: Postal workers to protest at Staples stores
'Main street' concept takes shape at Sterling Ridge
Nebraska Crossing Outlets stores, layout
OSHA: Union Pacific must reinstate worker who reported injuries suffered on job
West Corp.'s 1st-quarter profits up 33 percent
Stock market ‘not rigged,’ TD Ameritrade CEO says
First lady announcing one-stop job site for vets
Powdered alcohols no longer have label approvals
'We have a serious problem in Nebraska': PSC discusses concerns over Uber, Lyft
Recycle that old computer at free event
Proposed 5% hike in cab fares meets reluctant state transportation official
Secondhand shop-hop is this week
Deadline Deal thumbnail
7M Grill
Half Off Delicious Comfort Fusion Food & Drinks!
Buy Now
< >
SPOTLIGHT »
Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.
WORLD-HERALD ALERTS »
Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.
Can't find what you need? Click here for site map »