Carrier News

UHC Will Stop Selling Individual Comprehensive Medical Plans in TX in 2017

Today, UHC announced that they will stop selling individual medical plans in Texas on and off exchange in 2017. UHOne (the individual division of UnitedHealthcare) notified brokers via two emails this morning. Read the and on-exchange announcement.

According to the announcements, UHOne is withdrawing from all off-exchange markets except Utah and all on-exchange markets except Nevada, New York, Virginia, Florida, Georgia, and Illinois. Existing policyholders will remain covered until Dec 31, 2016. Affected policyholders will begin receiving letters about the exit in the coming weeks.

The change only applies to comprehensive major medical plans. We expect UHOne to continue selling short-term medical, dental, critical illness, hospital indemnity, term life, accident, and vision plans in Texas next year.


UHC’s exit was expected. The company has been vocal about their losses in the individual segment and the sustainability of the market. Interestingly, UHC’s financials in the individual segment in Texas have been much better than their competitors. In Nov 2015, we analyzed carrier MLR reports on the 2014 calendar year and compared it to 2013 data. The data isn’t very reflective of UHC’s experience current experience because they mostly sat on the sidelines in 2014. The 2015 calendar year data is not yet publicly available, but provides financial research on UHC’s 2015 exchange business in this blog post.

UHC’s exit, coupled with the elimination of broker compensation during SEP, is a sign of individual market turbulence in the coming years.

The market should remain competitive. UHC appears to be the only major carrier withdrawing from the TX market. Networks will continue to shrink. Access to care will be heavily managed. The dynamics of the market are difficult. Coverage is guarantee issue without underwriting. No riders. No pre-existing condition exclusions. Using adjusted community rates, carriers can only vary rates by age, geographic location, and tobacco use. Out-of-pocket limits are restricted. Plans must be robust enough to provide Essential Health Benefits. The penalty under the individual mandate for not having insurance is insignificant. Via special enrollment opportunities, people with new health conditions can usually find a way to get covered. Claims are high. The overwhelming majority of carriers operate at a loss and will continue to do so in the near future even as they raise rates 20-60% year over year.

For most people, individual coverage will only be affordable with a hefty subsidy on the exchange. The exchange will play a more important role in distribution. Individuals with access to group plans will continue to migrate to them. The process started in Jan 2016. We expect the migration to mature by 2018.

We fully expect the federal government to enact changes to ACA in the next Administration. The complexion of the changes will depend heavily on which party controls the legislative and executive branches.

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