Aetna (NYSE: AET) will no longer sell individual health insurance in Colorado, saying it can't remain competitive in the state market. The decision affects 22,400 policyholders statewide and became effective Feb. 1, according to the Coloradoan.
This is Aetna's third major recent pullback on health insurance offerings in Colorado. It announced in the second half of 2010 that it will also stop selling new small-group and child-only individual-market policies, reports the Denver Business Journal.
In a nine-page filing with the state's Division of Insurance, Aetna was vague about the reason for the pullout. An Aetna spokesman told the Wall Street Journal the decision is proprietary, but cited affordability for policyholders as a major concern.
Many speculate Aetna is reacting to the new medical-loss ratio requirement that forces insurance companies to spend 80 percent of premium revenue on healthcare vs. overhead, reports the Coloradoan.
The exit presents a business risk for Aetna, because the company can't re-enter the state for five years, thereby missing the influx of new paying customers expected in 2014 when the federal health overhaul provides subsidies to individuals to buy coverage, according to the Wall Street Journal.
Aetna will continue to service its existing individual health insurance policies in Colorado until they come up for renewal. After that, it will renew existing policies for 12 months that expire between Feb. 1 and July 31, and for six additional months if the policy terminates between Aug. 1 and Jan. 31, 2012.
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