(Bloomberg) -- UnitedHealth Group, the largest U.S. health insurer, said its rates for Obamacare plans in New York may be too low because the failure of a competing insurer last year might lead to shortfalls in payments designed to stabilize Obamacare markets.

Read: Carriers debate their future with Obamacare

In states like New York, health insurers participating in the Patient Protection and Affordable Care Act negotiate annually with regulators to set prices for coverage.

UnitedHealth’s rates were set anticipating risk-sharing payments designed to stabilize the new insurance markets, William Golden, the company’s Northeast Region Chief Executive Officer, said at a state Senate round table Wednesday in Albany.

If the loss of a participant reduces the funds available to UnitedHealth, the company’s rates in New York’s PPACA market may be insufficient, Golden said.

“I have rates that are substantially too low based on risk- adjustment payments not being paid,” he said in the meeting.

The stabilization payments were thrown into doubt after regulators began shutting down Health Republic Insurance of New York in September because it was likely to become financially insolvent.

With its failure, Health Republic won’t be able to pay into the risk adjustment program, reducing the funds available to UnitedHealth and other plans in the state.

UnitedHealth fell less than 1 percent in New York to $116.03 at 11:49 a.m.

State regulators required that UnitedHealth’s New York rates take into account payments from the law’s risk-adjustment program, Golden said. The program redistributes funds from health insurers who have low-risk, low-cost patients, to those with less healthy, more expensive customers.

UnitedHealth requested a 22 percent rate increase for individual PPACA plans. Instead, state regulators allowed the company to boost rates by 1.65 percent. The company also sells business under the Oxford brand, which requested a 5.32 percent rate increase, and was forced to instead cut rates by 12.25 percent.

The company has said that it should have stayed out of PPACA’s individual markets until they stabilized. In November, UnitedHealth said it would record hundreds of millions of dollars in losses related to the business.

“It was for us a bad decision,” CEO Stephen Hemsley said at a December investor meeting in New York. It’s not clear if the potential problems in New York are accounted for in the company’s previously announced anticipated losses.

Instant Insights /

UnitedHealth says New York PPACA plans could be in trouble

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