Two of the largest health insurers, UnitedHealth (UNH) and Elevance Health (ELV), have informed Colorado regulators of their plans to exit several Affordable Care Act (ACA) individual health plans in Colorado starting in 2026, Bloomberg reported. This move could impact nearly 96,000 Coloradans, causing them to seek new health coverage for the upcoming year.
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This news follows a similar decision by CVS Health’s (CVS) Aetna unit, which announced in May its full withdrawal from the ACA marketplaces.
Key Headwinds Putting ACA Health Plans at Risk
The exit comes as the ACA individual market, which provides coverage for over 24 million Americans, is facing headwinds. Rising medical costs, tight enrollment rules, and regulatory pressures are the key reasons for both companies’ decisions.
Further, a key reason for the market instability is the potential expiration of expanded federal tax credits next year, which currently help lower the cost of these plans. Without an extension, premiums are projected to increase by double-digit percentages in many areas.
Colorado’s Insurance Commissioner Michael Conway has expressed concerns, stating, “I don’t know how we can ring alarm bells any louder.” He urged Congress to extend the tax credits and called on state lawmakers to provide a temporary solution.
The regulator noted that a third of the state’s about 300,000 individual market plan holders could lose coverage if the federal subsidies are not extended.
UNH Improves Oversight
UnitedHealth recently disclosed governance changes, naming F. William McNabb as lead independent director. McNabb has been on the board since 2018 and previously led Vanguard, an investment management company. He replaced Michele Hooper, who will remain a director.
The company also set up a public responsibility committee, led by Hooper, to watch over financial, regulatory, and reputational risks, as well as mergers. The company said the move reflects its commitment to integrity and performance, following recent challenges such as leadership changes and cuts to Medicare funding.
Is UNH a Good Buy Right Now?
Turning to Wall Street, UNH stock has a Strong Buy consensus rating based on 18 Buys, two Holds, and one Sell assigned in the last three months. At $316.10, the average UnitedHealth stock price target implies a 3.37% upside potential.
