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January 17, 2013

Insurers may prove choosy with overhaul exchanges

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

UnitedHealth Group Inc. CEO Stephen Hemsley told analysts 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, so Hemsley said the company hasn't made any specific decisions.

But he 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 and could eventually join more.

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.

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