Prominent health insurer Aetna, along with other industry giants UnitedHealth and Cigna, announced in late May 2013 that they would be pulling out of California’s health insurance marketplace—one of many opening in states across the nation on October 1, 2013. These health insurance marketplaces represent a benchmark in the implementation of President Obama’s Affordable Care Act; aimed to create competitive marketplaces across the country to give consumers a variety of coverage options as they comply with the law’s individual mandate.
Announcement of withdrawal from California’s marketplace received little buzz or controversy in national news, but Aetna’s 50,000 existing Californian individual policyholders are left wondering: what does Aetna’s exit from the California health insurance marketplace mean for consumers?
If you’re one of Aetna’s 50,000 existing health insurance policy holders living in California, a lot. Otherwise, not much.
Aetna’s decision to exit would have had a larger impact if it had a larger market share in the state, but its 5.2% market share (as of 2011) doesn’t seem to have a large impact on individuals and families who will have to purchase a new plan before January 1, 2014. In fact, the 1.5 million Aetna members in California to the state’s 50,000 individual policy holders would imply that the insurance provider’s focus lies in group health insurance plans for small and large employers.
Although Aetna’s tiny slice of the market pales in comparison to that of Kaiser Permanente and Anthem Blue Cross and Blue Shield of California’s (a slice that comprises nearly 87% of the state’s health insurance market), it still limits choices available to California residents when the state’s health insurance marketplace opens in just two weeks.
On the other side of the coin, those 50,000 existing Aetna policy holders that didn’t hear about Aetna’s decision in the news will soon find the ball in their court; the company has informed its customers that they would have to go it alone and find new health insurance coverage. Aetna also stopped taking applications for health insurance coverage in California as of July 15, 2013.
Most may wonder why Aetna would fold their hand so early, but industry analysts says it’s more of a strategic move. Aetna, like UnitedHealth, Cigna, and others, are taking a backseat this year to learn more about the marketplaces and how they work. As we’ve noted before, the marketplace is one of the pillars of the Affordable Care Act, but one shrouded in uncertainty; between privacy concerns that may affect consumers and a relationship with a marketplace that feels more like a financial gamble to health insurance providers, one can hardly blame Aetna for dodging the literal big blind.
