Covered Calif. Rejects UnitedHealth’s Bid To Sell Coverage Statewide
On Thursday, Covered California rejected UnitedHealth Group's bid to sell coverage to individuals statewide, the Los Angeles Times reports.
According to the Times, UnitedHealth had the opportunity to join Covered California in 2013 as the Affordable Care Act was rolled out. However, the insurer left the state's individual health insurance market and decided not to participate in most of the ACA exchanges across the country.
Since then, UnitedHealth has been expanding into ACA policies nationwide and now participates in 23 state exchanges across the country (Terhune , Los Angeles Times, 1/15).
Brandon Cuevas, CEO of UnitedHealthcare of California, sent a letter to state officials urging them to support its coverage expansion into California.
Cuevas wrote, "We are prepared to enter the market statewide, in all regions for both the health benefit exchange and small business health options program including those where little or no choice currently exists for consumers" (Terhune , Los Angeles Times, 1/15).
However, some consumer advocacy groups in California opposed UnitedHealth's entry into the exchange because of the insurer's "skinny" health plans for large employers. Health Access and the California Labor Federation encouraged Covered California to ban such policies.
Details of New Rules
On Thursday, Covered California adopted new rules that significantly limit where UnitedHealth can offer health plans to individuals, according to the Times (Terhune , Los Angeles Times, 1/15).
The exchange previously would not allow new insurers to enter the marketplace until 2017.
Under the new policy, insurers that already are established in the state but not yet participating in the exchange can apply to sell individual coverage but only in underserved areas (Bartolone, "KXJZ News," Capital Public Radio, 1/15).
For example, UnitedHealth and other insurers that were operating in California before the ACA rollout can sell coverage only in five of the state's 19 regions, in which there are fewer than three coverage options. Under the rule, UnitedHealth is barred from selling coverage statewide until at least 2017, according to the Times.
Meanwhile, newly licensed insurers can apply to sell coverage anywhere within the state. Those insurers must apply by Feb. 16 to start selling coverage in 2016.
Covered California Executive Director Peter Lee said large, well-established insurers should not be able to enter the individual exchange immediately because otherwise they would undercut competitors who joined the state exchange when it first opened.
Lee said, "United or other plans that were in the market in 2012 should have a higher bar," adding, "We think the health plans that helped make California a national model should not be in essence undercut by plans that sat on the sidelines."
Jones Opposes Rules
However, California Insurance Commissioner Dave Jones (D) criticized the new policy, saying it favors the exchange's existing insurers and limits coverage options.
Jones said, "Covered California's decision to substantially restrict where new health insurers can sell in 2016 protects the big health insurers' market share and hurts consumers by denying them additional choices." He added the exchange "ought to be encouraging, not discouraging, new insurers to come in" (Terhune , Los Angeles Times, 1/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.