UnitedHealth withdraws from California's individual market

UnitedHealth has announced that it will exit the individual market in California by the end of the year, leaving about 8,000 individual members to find new coverage, according to the Los Angeles Times.

The nation's largest health insurer said it wasn't economically worthwhile to remain in the California individual market. "Our individual business in California has always been relatively small ... [and] over the years, it has become more difficult to administer these plans in a cost-effective way for our members," a UnitedHealth spokeswoman said.

Aetna made a similar decision last month to pull out of the California individual market, saying it will focus instead on coverage for employers, Medicare and its dental plans throughout the state, FierceHealthPayer previously reported.

With both UnitedHealth and Aetna choosing not to compete for new consumers under the reform law, some industry analysts believe the companies don't want to accept individual applicants who may have pre-existing conditions or offer comprehensive benefits with out-of-pocket limits.

"The business model of health insurance is fundamentally changing and some companies are willing and able to adapt," Sabrina Corlette, a research professor at Georgetown University's Center on Health Insurance Reforms, told the LA Times. "Given the limited market share those carriers had, UnitedHealth and Aetna have made the calculation that it required too much of an investment to change their strategy in California."

But California Insurance Commissioner Dave Jones think the decisions will negatively affect the market. "It means less choice, less competition and even more consolidation of the individual market with three big carriers."

To learn more:
- read the Los Angeles Times article