This is the impact of the nation's largest insurer leaving Obamacare

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United Healthcare: We'll exit most Obamacare exchanges



President Obama's landmark Affordable Care Act was seemingly dealt a huge blow Tuesday when the nation's largest insurer by people covered, United Healthcare, announced it was leaving the state exchanges in all but a "handful" of states.

These exchanges are the cornerstone of Obamacare, which provide a marketplace for Americans who don't have a work insurance offering to pick a plan to cover themselves and their families.

READ MORE: The country's largest health insurance company is almost entirely quitting Obamacare

While it would appear that United Health's exit would radically change the game for the ACA exchanges, the impact may not be that significant.

For one thing, United Health never really entered these marketplaces head first. In fact, as of March 31, the company insures only 750,000 of the more than 12 million people enrolled in Obamacare.

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This is the impact of the nation's largest insurer leaving Obamacare
WASHINGTON, DC - MARCH 04: Ryan Burrows, right, protests with others that are not in support of the portions of the Affordable Care Act on which the Supreme Court of the United States was hearing arguments on Wednesday March 04, 2015 in Washington, DC. (Photo by Matt McClain/ The Washington Post via Getty Images)
Protestors hold placards challenging 'Obamacare' outside of the US Supreme Court on March 4, 2015 in Washington, DC. The US Supreme Court heard a second challenge to US President Barack Obama's Affordable Care Act. The US Supreme Court faces a momentous case Wednesday on the sweeping health insurance reform law that President Barack Obama wants to leave as part of his legacy. The question before the court is whether the seven million people or more who subscribed via the government's website can obtain tax subsidies that make the coverage affordable. A ruling is expected in June. AFP PHOTO/MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
Protestors hold placards challenging 'Obamacare' outside of the US Supreme Court on March 4, 2015 in Washington, DC. The US Supreme Court faces a momentous case Wednesday on the sweeping health insurance reform law that President Barack Obama wants to leave as part of his legacy. The question before the court is whether the seven million people or more who subscribed via the government's website can obtain tax subsidies that make the coverage affordable. A ruling is expected in June. AFP PHOTO/MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
Demonstrators from Doctors for America in support of U.S. President Barack Obama's health-care law, Obamacare, hold signs while marching in front of the U.S. Supreme Court in Washington, D.C., U.S., on Wednesday, March 4, 2015. A U.S. Supreme Court argument over Obamacare's tax subsidies divided the justices along ideological lines, potentially leaving two pivotal justices to decide the law's fate. Photographer: Andrew Harrer/Bloomberg via Getty Images
Anna Salerno holds a sign and waits with other protestors for President Barack Obama to arrive at the Temple Emanu-El in Dallas, Wednesday, Nov. 6, 2013. President Obama is visiting the charity to thank local volunteers that are working to sign people up for the health insurance under the Affordable Care Act. (AP Photo/LM Otero)
Anti-abortion demonstrators hold signs during a Priests for Life protest outside the US Court of Appeals for the DC Circuit Court as the Court hears the oral arguments in the 'Priests for Life v. US Department of Health and Human Services (HHS)' case in Washington, DC, on May 8, 2014. The case centers around the HHS mandate in the Affordable Care Act, known as Obamacare, that religious organizations must cover contraceptions and abortion as part of their health insurance benefits, even if that goes against the organization's religious beliefs. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
Anti-abortion demonstrators hold signs during a Priests for Life protest outside the US Court of Appeals for the DC Circuit Court as the Court hears the oral arguments in the 'Priests for Life v. US Department of Health and Human Services (HHS)' case in Washington, DC, on May 8, 2014. The case centers around the HHS mandate in the Affordable Care Act, known as Obamacare, that religious organizations must cover contraceptions and abortion as part of their health insurance benefits, even if that goes against the organization's religious beliefs. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
Anti-abortion demonstrators hold signs during a Priests for Life protest outside the US Court of Appeals for the DC Circuit Court as the Court hears the oral arguments in the 'Priests for Life v. US Department of Health and Human Services (HHS)' case in Washington, DC, on May 8, 2014. The case centers around the HHS mandate in the Affordable Care Act, known as Obamacare, that religious organizations must cover contraceptions and abortion as part of their health insurance benefits, even if that goes against the organization's religious beliefs. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
Anti-abortion demonstrators hold signs stating they regret their abortions during a Priests for Life protest outside the US Court of Appeals for the DC Circuit Court as the Court hears the oral arguments in the 'Priests for Life v. US Department of Health and Human Services (HHS)' case in Washington, DC, on May 8, 2014. The case centers around the HHS mandate in the Affordable Care Act, known as Obamacare, that religious organizations must cover contraceptions and abortion as part of their health insurance benefits, even if that goes against the organization's religious beliefs. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
DORAL, FL - APRIL 23: Joyce Zaritsky, Bob Williams, Serena Perez and Mayte Canino (L-R) show their support for the Affordable Care Act in front of the office of U.S. Rep. Mario Diaz-Balart and Sen. Marco Rubio (R-FL) on April 23, 2014 in Doral, Florida. The protesters wanted to ask the politicians if they still want to repeal their constituents health care now that more than 8 million Americans have signed up for health insurance under the Affordable Care Act. (Photo by Joe Raedle/Getty Images)
A demonstrator in support of U.S. President Barack Obama's health-care law contraception requirement holds up a sign outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
A demonstrator in support of U.S. President Barack Obama's health-care law contraception requirement holds up a sign outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrators in support of U.S. President Barack Obama's health-care law contraception requirement hold up a sign outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrator Alan Hoyle holds a bible as he stands outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrators in support of U.S. President Barack Obama's health-care law contraception requirement hold up signs outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrators opposed to U.S. President Barack Obama's health-care law contraception requirement hold up signs outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrators opposed to U.S. President Barack Obama's health-care law contraception requirement hold up signs outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
Demonstrators in support of U.S. President Barack Obama's health-care law contraception requirement hold a sign outside the U.S. Supreme Court in Washington, D.C., U.S., on Tuesday, March 25, 2014. Hobby Lobby, a family-owned business that says it looks to the Bible for guidance, is seeking a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans. Photographer: Andrew Harrer/Bloomberg via Getty Images
MIAMI, FL - SEPTEMBER 20: Deborah Dion (L), Hattie Coleman and other protesters gather in the office of Florida State Rep. Manny Diaz as they protest his stance against the expansion of healthcare coverage on September 20, 2013 in Miami, Florida. As the protest took place, the Republican led House in Washington, D.C. by a 230-189 tally passed a short-term government spending plan that would eliminate all funding for 'Obamacare.' The Florida State government is also working against the Affordable Care Act by refusing to set up its own health care exchanges and they also have highlighted concerns about the navigators, federally funded workers who will help enroll people in health plans. (Photo by Joe Raedle/Getty Images)
Anti-abortion protesters pray outside the US Supreme Court on the third day of oral arguements over the constitutionality of the Patient Protection and Affordable Care Act on March 28, 2012 in Washington, DC. The 26 states challenging the law argue that Obama's Affordable Care Act must be completely repealed if the requirement that all Americans buy health insurance -- known as the 'individual mandate' -- is found to be unconstitutional. AFP PHOTO/MLADEN ANTONOV (Photo credit should read MLADEN ANTONOV/AFP/Getty Images)
A masked pro-Obamacare demonstrator stands outside the US Supreme Court June 25, 2012, in Washington, DC, as they await the court's ruling on the Healthcare Reform Law. The court announced the decision on healthcare will not happen before June 28. AFP PHOTO/Jim Watson (Photo credit should read JIM WATSON/AFP/GettyImages)
Anti-abortion protesters pray outside the US Supreme Court on the third day of oral arguements over the constitutionality of the Patient Protection and Affordable Care Act on March 28, 2012 in Washington, DC. The 26 states challenging the law argue that Affordable Care Act must be completely repealed if the requirement that all Americans buy health insurance -- known as the 'individual mandate' -- is found to be unconstitutional. AFP PHOTO/MLADEN ANTONOV (Photo credit should read MLADEN ANTONOV/AFP/Getty Images)
UNITED STATES – MARCH 27: Rep. Michele Bachmann, R-Minn., speaks during the Tea Party Patriots rally protesting the Affordable Care Act in front of the Supreme Court as the court hears arguments on the health care reform bill on Tuesday, March 27, 2012. (Photo By Bill Clark/CQ Roll Call)
UNITED STATES – MARCH 27: Tea Party Patriots supporters hold signs protesting the Affordable Care Act in front of the Supreme Court as the court hears arguments on the health care reform bill on Tuesday, March 27, 2012. (Photo By Bill Clark/CQ Roll Call)
Ronald Brock moves his anti-Obamacare sign as protestors, press, and passersby wait for decisions in the final days of the Supreme Court's term, in Washington, Wednesday, June 25, 2014. The court has yet to announce its finding in Sebelius v. Hobby Lobby Stores. The chain of arts-and-crafts stores does not want to provide insurance coverage for certain forms of contraception that it finds objectionable on religious grounds. The justices ruled Wednesday that a startup Internet company has to pay broadcasters when it takes television programs from the airwaves and allows subscribers to watch them on smartphones and other portable devices.The justices said by a 6-3 vote that Aereo Inc. is violating the broadcasters' copyrights by taking the signals for free. (AP Photo/J. Scott Applewhite)
Protestors block traffic near the White House in Washington, Thursday, June 5, 2014. In response to President Obama’s decision to delay the deportation review he ordered from the Department of Homeland Security, United We Dream protested near the White House to highlight the urgency of the administration acting now. (AP Photo/Susan Walsh)
Carlos Padilla of Seattle, Wash., holding flags, and other protestors block traffic near the White House in Washington, Thursday, June 5, 2014. In response to President Obama’s decision to delay the deportation review he ordered from the Department of Homeland Security, United We Dream protested near the White House to highlight the urgency of the administration acting now. (AP Photo/Susan Walsh)
Demonstrators display signs during a protest on West Florissant Avenue in Ferguson, Missouri on August 18, 2014. Police fired tear gas in another night of unrest in a Missouri town where a white police officer shot and killed an unarmed black teenager, just hours after President Barack Obama called for calm. AFP PHOTO / Michael B. Thomas (Photo credit should read Michael B. Thomas/AFP/Getty Images)
Pakistan protesters from the Jamaat-e-Islami party gather around a protester dressed as US President Barack Obama effigy during a pro-Palestinian demonstration against Israel's military campaign in Gaza, in Karachi on August 17, 2014. Indirect talks between Israelis and Palestinians for a long-term truce in Gaza resumed on August 17, 2014, with just over a day left before a temporary ceasefire is set to expire, a Palestinian official said. AFP PHOTO/Rizwan TABASSUM (Photo credit should read RIZWAN TABASSUM/AFP/Getty Images)
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In fact, according to the non-partisan Kaiser Family Foundation, which focuses on healthcare policy, the impact on enrollees premiums and competition would not be substantial.

"The effect of a United withdrawal nationally would be modest," said a study by Cynthia Cox and Ashley Semanskee of Kaiser. "The national weighted average benchmark silver plan would have been roughly 1% higher in 2016 had United not participated (less than $4 per month for an unsubsidized 40-year-old)."

Cox and Semanskee found that United offered mostly high cost plans in just 34 states in the US as of 2016, so by removing themselves from the exchanges the impact would not be as significant as you may think in terms of increased cost or limited choice.

In terms of competition, if United does remove itself from all exchanges Cox and Semanskee found that 53% of all counties covered by exchanges would have only one or two exchanges. While this is significant, most counties with limited options are more rural and less populated. Therefore, the total number of people with limited choice is still relatively low.

Here's Cox and Semanskee (emphasis added):

If United exits everywhere (again, with the exception of Harken Health in Georgia), the number of Marketplace enrollees with access to only one or two exchange insurers would increase (from 1.9 million to 3.8 million or from 15% to 30% of all enrollees), and the number of enrollees with only one insurer would also increase (from 303 thousand to 1.4 million or from 2% to 11% of all enrollees). Still, the vast majority of Marketplace enrollees (8.9 million or 70% of enrollees nationally) would continue to have a choice of three or more insurers, even in the absence of United.

8862 figure 22Reuters/Kevin Lamarque

This isn't to say that there won't be an impact on some people trying to gain health insurance through exchanges. As the researchers note, the move will disproportionately impact those in rural areas in some Southern states. But, in aggregate, the removal of United from Obamacare isn't a massive shift for costs or competition.

"On average nationally, based on our analysis of 2016 insurer premiums, United's participation on the exchanges had a relatively small effect on premiums," concluded the study.

"As a result, the weighted average benchmark premium would have been roughly 1% higher had United not participated in 2016 (not accounting for the possible effect changes in insurer participation may have had on pricing behavior or the potential for new entrants to the market)."

Now, as Cox and Semanskee note, the long-run effects of this move are a bit more uncertain. Insurers in communities with less competition could begin raising prices, but there are some provisions in the ACA that would prevent that.

Also, the impact of the move politically is another issue entirely. Republicans have been calling for the end of Obamacare since it was passed, so the optics of United Health's move are up for debate.

In the short-run, it doesn't appear that United Health's decision to pull out of the exchanges will make a huge difference for most Americans.

For a state by state breakdown of how United Health's move could impact you, check out the full post at the Kaiser Family Foundation website»

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SEE ALSO: The country's largest healthcare company is getting out of the Obamacare business.

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