Five individual health insurance companies, including two of the largest in the country, have chosen to stop selling their policies in Indiana, leading the Indiana Department of Insurance to ask that certain elements of the reform law of 2010 be phased in.
The third and fifth largest health insurance companies in the United States, Aetna Inc., from Hartford, and Cigna Corp., from Philadelphia, have decided that they will no longer be taking part in the market for individual health insurance in Indiana.
Moreover, American Community Mutual Insurance Co., from Michigan, Pekin Insurance, from Illinois, and Guardian Life Insurance Co. of America, from New York, have all backed out of the individual market in that state. The companies that are now leaving represented the coverage for about 10 percent of all of the people in Indiana who had individual health insurance, or over 20,000 Hoosiers.
The primary reason identified by these insurers for leaving Indiana is its new health care law which requires them to spend a minimum of 80 percent of premiums on medical bills. This regulation, which was once known as the medical loss ratio (MLR), will become effective in 2011, for all of the policies held by the insurer, not simply the new policies that they sell.
The insurance companies have protested that the administrative and marketing costs for individual policies are costly enough that they will not be able to make the rapid transition into the new requirements. There had previously been a standard of about 55 percent of individual premiums spent on medical bills, according to estimates from the Indiana Department of Insurance regarding Anthem Blue Cross and Blue Shield, the leader in the market.