NEW YORK (Reuters) - UnitedHealth Group Inc’s decision to exit most of its Obamacare health insurance exchanges next year means rivals will need to raise prices further to prop up an unprofitable business, healthcare analysts and policy experts said on Tuesday. The largest U.S. health insurer’s move would likely reduce consumer choices, particularly in states where UnitedHealth has been one of only a handful of players to offer insurance under President Barack Obama’s healthcare law, they said. Large pullbacks by providers like Anthem Inc and Aetna Inc are unlikely as they each await approval from the administration for proposed merger deals with smaller rivals, some analysts said. Spokespeople for Aetna and Anthem declined to comment on Tuesday. UnitedHealth is one of the biggest sellers of Obamacare plans, offering them in 34 states in 2016. The company warned in November that it was losing too much money on the business due to low enrollment and high service costs. On Tuesday, it said it would exit all but a handful of those markets. Many of the estimated 650,000 UnitedHealth plan members at the end of 2016 would need to find another insurer. “You will see significant rate increases for 2017 as the (health) plans try to figure out what is a premium at which (they) can make money,” said Caroline Pearson, senior vice president at research firm Avalere Health.  The government provides income-based tax credits to most exchange users, which would help soften the blow from any higher premiums, she said. “In terms of viability of the exchanges, I don’t think that this is going to affect that in the long term,” said Yevgeniy Feyman, deputy director of health policy at the Manhattan Institute for Policy Research. Even if other insurers decided to leave, he said, he could not envision the exchanges being so unprofitable that they ceased to work. A recent Kaiser Family Foundation study found UnitedHealth’s departure would leave only one insurer in 29 percent of the 1,855 counties where it offered health plans. The report found that if United had not participated in the exchanges in 2016, the national weighted average benchmark “silver” plan would have been about 1 percent higher in 2016. Republican lawmakers have repeatedly sought to repeal the Affordable Care Act, also known as Obamacare, which provides tax credits to help uninsured individuals buy medical coverage. They have said it creates unwarranted government intervention in personal healthcare and have warned that insurers would be left to cover sicker and older individuals. U.S. health insurers including Aetna and Anthem have also lost money on the exchanges, but have not said they would exit. The Obama administration estimates more than 12 million people signed up for private insurance on the exchanges for 2016. Insurers are in the midst of submitting proposed premium rates for 2017 ahead of mid-May deadlines set by state exchanges and insurance regulators. Aetna Chief Executive Officer Mark Bertolini has questioned whether the Obamacare business was sustainable, but said he was working with the government to improve it. Anthem CEO Joseph Swedish has said that the company was committed to the exchanges. “I would still be surprised if other major insurers followed United’s lead. United was in some sense in a category all its own,” Kaiser Family Foundation Senior Vice President Larry Levitt said.  Health plans sold to individual members represented a small part of UnitedHealth’s revenue compared to large-scale contracts with employers, while Aetna and Anthem both had substantial business serving individuals. Aetna and Anthem are undergoing a U.S. Department of Justice review of what would be an historic consolidation in the health insurance industry. Aetna has proposed buying rival Humana Inc, while Anthem has agreed to buy Cigna Corp. 
UnitedHealth's Obamacare exit adds pricing pressure on rivals