Some Big Insurance Companies Opt Out of California's Health Exchange

Thursday, 23 May 2013 08:31 PM

By Greg Richter

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UnitedHealth, Aetna and Cigna, three of the nation's major insurance companies, have decided to sit out the first year of California's health exchange.

The state announced 13 carriers that will compete for customers in Covered California, the health exchange set up under President Barack Obama's Affordable Care Act.

Every American will be required to have health insurance beginning Jan. 1, 2014 or pay a fine. States must either set up their own exchanges, like Covered California, or let the federal government set one up for them. Which option state's chose largely fell along political lines, with most "red" states declining to set up their own.

UnitedHealth, Aetna and Cigna already do most of their business in California through large companies that offer their employees insurance benefits. The trio will continue to do business in California that way.

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And the state's largest insurers, Kaiser Permanente and Anthem Blue Cross and Blue Shield of California, will be part of the exchange for individuals.

Peter Lee, head of Covered California, told the Los Angeles Times that any criticism that higher premiums and fewer choices would result from the lessened competition was unwarranted.

"There will be plenty of price competition for California consumers," Lee told the Times. "They will be benefiting from robust competition."

A United Health spokesman told the Times that the company is evaluating how the exchanges work, while a Cigna spokesman said his company chose to participate in only half of the 10 states where it sells individual policies. Cigna intends to more fully participate in the future.

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