Principal Financial Group, based in Iowa, announced in 2010 that it would stop selling health insurance, impacting 840,000 people who receive their insurance through employers served by the company. The company assessed its ability to compete in the new environment created by PPACA and concluded its best course was to stop selling health insurance policies.
Cigna announced that it is no longer offering health insurance coverage to small businesses in 16 states and the District of Columbia: California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kansas, Missouri, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and Washington, D.C.
Since June of 2010, 13 plans have left the health insurance market in Iowa, citing regulatory concerns.
In New Mexico, four insurers — National Health Insurance, Aetna, John Alden, and Principle — are no longer offering insurance to individuals or to small businesses — drying up the market and driving out competition.
In Colorado, Aetna will stop selling new health insurance to small groups in the state and is moving existing clients off its plans this year, affecting 1,200 companies and 5,200 employees and their dependents. Aetna also has pulled out of Colorado’s individual market because of concerns about its ability to compete there, dropping 22,000 members. Aetna also has dropped out of the small-group market in Michigan and several other states.
In Virginia, UniCare has eliminated its individual market coverage for about 3,000 policyholders. And shortly after the health law was enacted in 2010, a new Virginia-based company, nHealth, announced it was closing its doors, saying that the regulatory burdens posed by the health law made it impossible to gain investor support to continue operating.
These announcements that carriers are leaving markets accelerates a trend that the American Medical Association says means four out of five metropolitan areas in the United States do not have a competitive health insurance market. The report found that in about half of the metropolitan markets, at least one health insurer had a commercial market share of 50 percent or more. In 24 states, the two largest health insurers had a combined commercial market share of 70 percent or more.
This is a negative and destructive trend, leaving fewer carriers to serve these markets and giving small businesses and the insurance agents who serve them less leverage to negotiate better benefits and lower rates among competing companies.
Children-only policies
One of the provisions of the health law that the Obama administration touts most enthusiastically is the requirement that employers who offer dependent coverage allow employees to add their 26 year old “children” to their policies. It is highly ironic, then, that another provision is causing huge losses of coverage among children whose parents or guardians were buying health insurance policies for them.
Health and Human Services Secretary Kathleen Sebelius told health insurers shortly after PPACA was enacted that they must write policies for children under 19, including those with pre-existing conditions, no matter when their parents and guardians apply. This creates an incentive for parents to wait to buy the coverage until the children have a significant medical condition.
This in turn creates a substantial risk of “adverse selection,” which makes it financially unsustainable for health plans to continue to offer these policies. Rather than wait for this to happen, many carriers have decided to leave this market altogether. In at least 17 states, child-only policies no longer are available.
