UnitedHealth Exits Calif. Market; Obama Gives Employers Reprieve

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UnitedHealth, the nation’s largest insurer, told California state regulators that it would leave the California individual health insurance market, effective at the close of 2013. A similar move by Aetna last month leaves a combined 58,000 Californians shopping for coverage in a market that does not include the nation’s two largest insurance companies, according to an article in the Los Angeles Times.

Both insurers will continue to offer insurance in California through employers, signaled their lack of interest in the California individual market by failing to submit a plan to participate in Covered California, the state’s insurance exchange.

The state has been more prescriptive than other states by requiring exchange participants to offer uniform deductibles and benefits in four different packages, a move intended to simplify price comparisons for consumers, according to the article. Insurers responded by negotiating sharp discounts from hospitals and physician providers.
The LA Times article quotes a UnitedHealth spokesperson as saying that because the insurer’s individual market share has been relatively small, “…over the years, it has become more difficult to administer these plans in a cost-effective way for our members.”

The California Insurance Commissioner Dave Jones expressed his concern for the state’s consumers. “It means less choice, less competition and even more consolidation of the individual market with three big carriers,” he told the LA Times. Anthem Blue Cross, Kaiser Permanente, and Blue Shield of California claim an estimated 87% of the state's individual health insurance market.

Meanwhile, the Obama Administration just announced that it will delay penalties until 2015 for large employers that fail to provide insurance for its employees, according to MarketWatch. In a post on the Treasury Department’s blog, Assistant Secretary for Tax Policy Mark J. Mazur wrote: “We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively.”