The nation’s largest health-insurance company won’t join the government-run marketplace in Arizona when the new U.S. health-care law requires mandatory coverage for most consumers.
Most major commercial health-insurance companies that now sell policies in Arizona have signaled their intent to sell insurance over the new marketplaces, called exchanges.
But UnitedHealth Group — the nation’s largest health-insurance company and Arizona’s second-largest insurer — so far has decided to forgo the online marketplaces in Arizona, which begins enrolling consumers Oct. 1 for coverage in 2014.
In a statement, UnitedHealth said it expects the “economics, sustainability and dynamics” will become more clear over time, but the company won’t sell plans when the exchanges launch in Arizona.
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“We are simply taking the time to carefully evaluate and better understand how the exchanges will work to ensure we are best prepared to participate meaningfully in their development and continue to provide the service our current customers and members have come to expect,” the statement said.
Filings with the state Department of Insurance suggest the robust competition that now exists in Arizona will continue under the Affordable Care Act. Aetna, Blue Cross Blue Shield of Arizona, Cigna, Health Net, Humana, University of Arizona Health Plans and Compass Health Cooperative are seeking approval to sell plans.
The Obama administration’s health exchanges will extend private coverage to the uninsured by matching health insurers with consumers who may be eligible for subsidies based on their income. The federal government will run Arizona’s online marketplaces for individuals and small businesses seeking to purchase coverage.
Last week, President Barack Obama trumpeted the health-care law’s benefits such as rebates to consumers and health-insurance rates that have been lower than projected in some states. A federal report released this week also showed rates for individuals were as much as 18 percent lower than projected in 10 states and Washington, D.C. New York insurance regulators announced they approved rates for 2014 individual insurance plans that will be about half of current rates.
In Arizona, there’s been little information about the plans available for 496,000 consumers expected to shop in the individual marketplace and another 510,000 who will use a related exchange for small businesses. Those who earn up to 400 percent of the federal poverty level — $45,960 for an individual or $94,200 for a family of four — will be eligible to purchase government-subsidized health insurance from these new marketplaces.
There has been even less information in Arizona about the impact on rates. Health insurers participating in the Arizona exchange say consumers and businesses won’t get a true glimpse of the rates until the federal government completes its review and certifies eligible insurers’ plans.
Medicare’s Center for Consumer Information and Insurance Oversight, the agency that reviews the plans, expects to notify health insurers whether the plans pass muster by early September.
UnitedHealth has decided to sit out exchanges in other states, including California, where Aetna and Cigna also will not participate.
UnitedHealth is Arizona’s second-largest commercial health insurer as ranked by premiums, trailing only Blue Cross Blue Shield of Arizona. UnitedHealth provides health insurance to 1.4 million Arizonans across several types of groups, including large and small employers, individuals, Medicare, Medicaid and military and veterans. Its decision to sit out the online marketplace does not affect coverage for most of those consumers.
Analysts and brokers who track Arizona’s health-insurance market say UnitedHealth’s decision is likely a function of its size and business model. Although UnitedHealth sells individual insurance in Arizona through its Golden Rule Insurance plan, it’s not a dominant part of its overall business.
“It’s an unknown risk, and they can afford to avoid the risk if they want to,” said Henry GrosJean, a Phoenix health-insurance broker who represents small businesses.
Jeff Stelnik, Blue Cross Blue Shield of Arizona’s senior vice president, said the insurer has tailored its plans based on talks with customers and businesses and the law’s requirements. For example, the law does not allow insurers to deny coverage to individuals based on their health and cannot charge any age group more than three times more than another age group.
Health-insurance premiums can vary widely depending on the type of coverage, benefits and the network of doctors and hospitals allowed by the plan, and Arizona has historically been a state where many insurers compete to snare the business of individuals and small and large employers.
Stelnik said he expects that some health insurers will limit the network of hospitals, doctors and other health-care providers allowed by the plan. A narrow group of providers is one trade-off for consumers who are worried about a plan’s cost.
Blue Cross Blue Shield will seek approval to sell six insurance plans over the new marketplaces, Stelnik said.
Under the Affordable Care Act, plans will be identified by the level of benefits offered. Insurance that offers the most comprehensive coverage will be labeled platinum, followed by gold, silver and bronze plans.
“Consumers are looking for choice and control of their health-care benefits,” Stelnik said.
Arizona Public Interest Research Group issued a report this month that examined new or proposed rate increases among Aetna, Blue Cross Blue Shield and Golden Rule Insurance. The review found that Golden Rule Insurance sought the highest average rate increase of 18.1 percent for a plan that covers nearly 32,000 consumers.
Aetna’s rate increase of 14.1 percent will affect nearly 47,000 individuals. PIRG said that two Blue Cross Blue Shield plans also won increases — a 10.9 percent average increase that took effect July 1 for a plan that covers more than 67,000 individuals and a separate 13.3 percent annual increase effective Oct. 1.
Stelnik disputed the PIRG’s numbers, saying Blue Cross Blue Shield’s average increase effective July 1 will be 9.8 percent. He attributed the increases partly to the new law’s requirements for such items as free preventive health care, limits on age rating and new taxes.
Stelnik said that some consumers may see the cost of coverage increase — depending on benefits, age and other factors — when the marketplaces launch.
The rate changes “will vary significantly from individual to individual,” Stelnik said. “The law is expanding access, and not necessarily improving affordability.”
Date: Jul 22, 2013