UnitedHealth Group will stop selling individual health insurance plans in California at the end of the year. Previously, Aetna announced that it would stop selling individual plans at the end of 2013. Insurance Commissioner Dave Jones said, “While both United Healthcare and Aetna have a very small share of California’s individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers — Anthem Blue Cross, Blue Shield of California, and Kaiser — which means an increased likelihood of even higher prices from those health insurers downstream.”
Jones said, “One of the factors I believe contributed to this decision…is the special tax break that California law gives to Anthem Blue Cross and Blue Shield, which has allowed and continues to allow those two companies to avoid paying $100 million in state taxes a year. Aetna and United Healthcare don’t get the special tax break provided to Anthem Blue Cross and Blue Shield, and so they faced a major competitive disadvantage in California.”
Aetna had approximately 60,000 people covered by individual policies as of March 31, 2013, and it projects it will have approximately 50,000 people covered by individual policies at the end of 2013, when the company exits the individual market. United Healthcare, through its subsidiary PacifiCare, had approximately 10,000 individual policyholders late in 2012. Policyholders from both companies have been informed they can keep their existing health insurance until December 31, 2013. Aetna and United Healthcare policyholders will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange.
