Tuesday, July 02, 2013

What if your carrier exits the market and there is no exchange to fall into?

United Health just announced they are exiting the CA individual market.


"The nation's largest health insurer, UnitedHealth Group Inc., is leaving California's individual health insurance market, the second major company to exit in advance of major changes under the Affordable Care Act.

UnitedHealth said it had notified state regulators that it would leave the state's individual market at year-end and force about 8,000 customers to find new coverage. Last month, Aetna Inc., the nation's third-largest health insurer, made a similar move affecting about 50,000 existing policyholders."

That is 58,000 individuals/families that will not have insurance January 1st, 2014. Most will have no choice but to sign up in the Exchange. I have heard a number of people speculate that the government will push back  the start of the Exchanges as they will not have them ready in time. If they do, what happens to all these people whose carrier has exited the market?

This is the problem with comprehensive solutions like ACA: you miss on one part and you crash (or at least damage) the entire system. A more logical bill would have created the Exchanges without all the impact on the existing market until they were up and running smoothly. That way, if they missed, the impact would have been minimal.

This announcement also doesn't bode well for competition and choice. It appears the regulation is so onerous that even with 8000 or 50000 members it is not worth competing in the market. If established players don't want to join in, I can't imagine many upstarts wanting to give it a try.
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