Major Health Insurers Opt Out of CA's State-Run Market

Image: Major Health Insurers Opt Out of CA's State-Run Market

Thursday, 23 May 2013 12:42 PM

By Melanie Batley

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Millions of Californians could face higher health insurance premiums next year after some of the nation's most prominent health insurers refused to sign up for California's new state-run health insurance exchange.

The move could signal a rocky road ahead for the national rollout of expanded health coverage under Obamacare.

According to The Los Angeles Times, UnitedHealth, the nation's largest private insurer, Aetna, and Cigna all are opting out of Covered California, the state insurance exchange, which announced Thursday morning the winning bidders and their proposed rates and plans for as many as 5 million people shopping for coverage next year.

The goal of the exchange is to offer individuals and small businesses a choice of private health plans similar to those that workers at large companies already receive. But with fewer insurers participating, some argue that individuals will face significantly higher premiums and fewer choices.

Peter Lee, executive director of Covered California, rejected those concerns, telling the Times, "There will be plenty of price competition for California consumers. They will be benefiting from robust competition."

Under the new system, insurers will be selling policies with uniform benefits packaged in four broad categories of coverage, according to the Times.

Though the state's largest insurers, Kaiser Permanente and Anthem Blue Cross and Blue Shield of California, are expected to participate in the state-run market for individual health coverage, policymakers have long been concerned that the new system could drive up rates for healthy middle-income residents once the expanded system incorporates sicker and low-income people for the first time within the same plans.

According to estimates from California Health Benefit Advisers, around 1.7 million are expected to participate in Covered California without subsidies or the individual private market, while another 1.2 million people would qualify for Covered California with subsidies.

In March, state officials issued a report estimating that premiums on individual policies could rise an average of 30 percent for middle-income residents who pay for their own insurance under the new system.

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