Aetna to pull out of individual health insurance market in California

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Aetna bows out of individual health insurance market

Health insurance has proven to be a divisive subject in the U.S. The federal Affordable Care Act has introduced many changes to the health insurance field, but it is to the extent that some states are taking health care reform that may be causing significant trouble for businesses. While the Affordable Care Act has introduced a variety of stringent regulations, states are also encouraged to adopt their own regulations and make reforms that would align better with the federal law. In California, reform is proving too much of a complication for one of the state’s primary insurers.

State and federal regulations prove problematic

Aetna has notified the California Department of Insurance that it plans to stop selling health insurance policies in the individual market by the end of 2013. The company will continue to offer coverage for employers and small groups, but the individual market has proven too volatile due to federal and state regulations. The insurer has informed regulators, but is still working to inform policyholders and brokers throughout the state of the change.

Health Insurance AetnaExchange may cause some problems for insurers

The move was likely triggered by the impending launch of the state’s health insurance exchange, called Covered California. The exchange is meant to establish new standards when it comes to health insurance coverage. The exchange is being built to cater to the individual market, which already has a great deal of competition inherently. Aetna is one among several insurance companies that believe the exchange will lead to higher prices for coverage.

Federal law may also be a point of contention

Another problem with the individual market may lie with the Affordable Care Act itself. The federal law requires that all U.S. citizens purchase and maintain health insurance coverage, but similar laws exist in regards to auto insurance and many drivers go without such coverage without facing any significant consequences. Some health insurance companies have argued that there is no incentive for young, healthy consumers to purchase coverage. Therefore, the market would be filled with “risky” consumers that have costly medical conditions to take care of.

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