MuniLand: Big News, Little Impact – UnitedHealth Exits ACA Marketplace

This week UnitedHealth (the largest private health insurer in the U.S.) withdrew from the Affordable Care Act’s (ACA) state run health insurance markets. While the headline grabbed attention, we believe its impact will be minimal to the overall ACA health insurance market and to hospital credits. The Kaiser Family Foundation (a non-profit organization focusing on national health issues) agrees and stated that the withdrawal of UnitedHealth from the ACA market place won’t have a dramatic impact. The Kaiser report references UnitedHealth’s cautious approach to engaging in the ACA market place. UnitedHealth typically offered a higher cost plan in the markets in which it participated. As such, the overall market penetration is limited. The biggest impact will be felt (and this is a problem with the ACA market overall) by small rural counties that have a limited number of insurers. SNWAM’s hospital credit exposure is in large metropolitan areas, and we focus on credits that have regional footprints. So, even if UnitedHealth did have a material impact on the sector, our hospital credits would be little affected by the change.

Sources: SNWAM Research and Kaiser Family Foundation