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UnitedHealthcare vying for a slice of Obamacare pie?

Crain’s Chicago Healthcare Daily reports:

“If UnitedHealthcare of Illinois Inc. starts selling plans on the state’s health insurance exchange this fall — as reported today — the insurer most likely won’t make a large dent in Blue Cross & Blue Shield of Illinois’ market share.

Still, there are chances for the carrier, an arm of Minneapolis-based UnitedHealth Group Inc., to make inroads in the state.

First off, even though roughly 217,000 people signed up for plans on the Illinois Health Insurance Marketplace for 2014, many thousands more uninsured sat out the first year of Obamacare. Those people, hit with tax penalties for going without coverage this year, could be more motivated to buy insurance the next time around.

Also, given Blue Cross’ difficulties processing applications during the 2014 enrollment period, there may be some customers willing to switch from the state’s dominant carrier to an alternative if the price is right.

“I wouldn’t expect them to take 50 percent or take a huge portion of this group that Blue Cross has,” said Nancy Daas, a partner at CMC Advisory Group, a Chicago-based benefits consultant. “To some degree they may be thinking that there are some opportunities going forward.”

Chicago-based Blue Cross dominated the marketplace in the enrollment for the 2014 plan year, garnering about 200,000 signups from Oct. 1 to April 19, 92 percent of the state’s total. The insurance giant was one of five carriers that offered plans on the state’s exchange, which was operated in partnership with the federal government’s site, HealthCare.gov.

United stayed off the Illinois marketplace for 2014 but is planning on entering the exchange with its own individual policies, according to the Chicago Tribune, citing unidentified sources.

A United spokesman would not confirm or deny the report, saying that the company is still evaluating its participation on the exchanges on a state-by-state basis.

“Although we intend to increase our participation in the exchanges as they mature and develop over time, in the near term we remain focused on the necessary first steps of this process, which include careful evaluation of exchanges on a state-by-state basis, (qualified health plan) application submissions and rate and product filings,” the spokesman, Kevin Shermach, said in an email.

PRICE PRESSURE

Before this year, nearly 1 million people in Illinois lacked insurance but had incomes too high to qualify for Medicaid, by some estimates.

If it does jump in, United will likely have to set its prices within shouting distance of Blue Cross’ to be relevant in the market.

For the 2014 plan year, Blue Cross had the lowest premiums among plans sold in the Chicago area in the bronze, silver and gold metal categories. For example, in Cook County, Blue Cross’ three lowest-cost silver plans all had premiums below $182 per month for a 27-year-old individual. No other carrier offered a plan below $200 a month, according to data released last fall by the federal government.

Depending on what plan features the company offers and how it price them, United’s entry could help hold down premium increases.

“With United Healthcare coming in, they’re going to try to undersell Blue Cross, which will help keep the rates low for people in the coming year,” said Jim Duffett, executive director of the Campaign for Better Health Care in Champaign.

Blue Cross has been the largest carrier in the state by premium revenue and membership for years, with United a distant second.

In 2012 United held about 8.4 percent of the total market for individual and group plans. Its share was smaller in individual plans; it covered about 36,000 lives that year, or 6.4 percent of the market, according to research by Carl McDonald, a Boston-based analyst at CitiGroup Global Markets Inc.

Meanwhile, Blue Cross covered nearly 309,000 people, for 69.3 percent of the individual market.

Carriers have from May 27 to June 10 to submit plans to the Illinois Department of Insurance for sale on the exchange. Open enrollment for the 2015 plan year starts Nov. 15.

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