Healthcare

Nation’s largest health-care insurer bails on Californians

Nation's largest health-care insurer bails on Californians

Sorry, you can’t “keep your insurance” if you like it, California.

The nation’s largest health insurer, UnitedHealth Group Inc., is leaving California’s individual health insurance market, the second major company to exit in advance of major changes under the Affordable Care Act.

The dearth of affordable health-insurance policies for individuals was one of the big problems Obamacare was going to solve. Rather than opening up a national marketplace, The Affordable Health Care Act was allegedly going to inject more choice and keep rates down through fabricated state-run “exchanges”.

California, which has led the way on implementation of Obamacare, has seen UnitedHealth, Aetna and Cigna all already opt out of participating in the state exchange. And now UnitedHealth has notified state regulators that it will abandon the state’s individual market altogether (it can’t come back for five years), which means 8,000 customers will have to find new coverage. The third-largest health insurer in the country, Aetna, has already left the market – and another 50,000 policyholders are searching for insurance.

There are still plenty of big players in the individual market (for now) but those California residents who are looking for new providers can thank price controls. As the Los Angeles Times points out, California has been “more aggressive than other states” in coercing insurers to be “competitive” by setting caps on deductibles and benefits across four main product categories. Some companies obviously see no future in such a highly regulated marketplace.

Think about this: Recently, Peter Lee, the executive director of California’s individual insurance plans under the Affordable Care Act, recently bragged that rates submitted “for the 2014 individual market ranged from 2 percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.” (Never mind that Avik Roy at Forbes quickly debunked the misleading claim, finding  individual rates for a typical nonsmoking 25-year-old man in California would increase of 64 to 146 percent.) How could California could get this done? By forcing insurance company profit margins to be as low as 2 percent.

Sounds nice. But someone has to pay. And in California, Aetna is proposing a rate increase of 22 percent; Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for many policyholders.

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Follow David Harsanyi on Twitter @davidharsanyi.

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