By Scott Dance, The Baltimore Sun
8:29 PM EDT, August 2, 2013
Aetna Inc. said Friday it canceled plans to sell insurance on Maryland's new health insurance exchange, set to open Oct. 1 as part of the federal health care reform law, after regulators cut the rates it could charge consumers for its plans.
Aetna was one of several carriers poised to sell on the state's exchange, along with Coventry Health Care, which Aetna acquired this spring. But Aetna told Maryland Insurance Commissioner Therese M. Goldsmith in a letter this week that cuts regulators made to the rates the companies had proposed "would not allow us to collect enough premiums to cover the cost of the plans."
The decision leaves the exchange with fewer choices for consumers who need to buy insurance, as required by the law, because they don't have it now or can't get it from their employer. But state officials said they don't expect the loss of Aetna and Coventry to significantly reduce consumers' options.
Officials hope the exchange will keep the cost of health insurance low for consumers with competition among the insurance carriers. And as more people enroll, costs are expected to decline.
"This is not a step that we take lightly," Aetna said in a statement. "We believe it is critical that our plans not only be competitive, but also financially viable, allowing Aetna and Coventry to meet the long-term needs of the Exchanges in which we choose to participate."
Aetna and Coventry combined insure 13,000 individual members in Maryland and 620,000 individuals nationwide. The decision does not affect coverage the insurers offer in the state through employers.
Aetna had filed a proposal with state insurance regulators to raise its rates 25.4 percent, the highest of any carrier. The rate the state approved July 26 was 29 percent lower than what Aetna sought, while other carriers saw their proposals cut back by as much as 33 percent.
State health officials estimate that 180,000 people will buy individual insurance policies from the exchange for 2014. They will largely come from the 146,078 Marylanders who currently buy in the individual market and from the estimated 740,000 uninsured people in the state.
Top state health insurance officials, including Goldsmith and Rebecca Pearce, executive director of the state exchange, Maryland Health Connection, said they were confident in the range of options that will be available on the exchange when it opens this fall. Coverage through the exchange becomes effective Jan. 1.
"Notwithstanding Aetna's business decision not to offer products in Maryland's individual insurance market, consumers will continue to have many choices among health insurance carriers and plan options when open enrollment begins in October," Goldsmith said in a statement.
Pearce added that the carriers' departure does not affect an analysis showing rates on Maryland's exchange to be competitive nationally.
"The rates are still the lowest in the country," Pearce said in an interview. "I believe the plans will be competitively priced and people will find something that's right for them."
Insurance officials do not expect any other carriers whose rates were approved to follow Aetna.
Aetna's decision came days after it pulled its and Coventry's plans from Georgia's exchange, and as its CEO expressed hesitation about participating in other exchanges around the country. The company pulled out of California's individual insurance market earlier this year.
In a quarterly earnings conference call, Aetna CEO Mark Bertolini said the company was cautious about the rollout of the exchanges and was considering whether to cut back on its participation in them in 14 states. The company, meanwhile, plans to participate in private exchanges being run by benefits companies and is working on launching its own exchange for Aetna products.
"We are continuing to evaluate where Aetna and Coventry have submitted bids and are in the process of rationalizing our combined exchange participation," Bertolini said.
Also Friday, Coventry pulled a dental plan to be offered on Maryland's exchange. That plan's rates had been approved without modification.
One other insurer, a new cooperative model, said it remains committed to Maryland's exchange.
"We are very much devoted to staying on the exchange. That's the mission for our entire insurance company in the first place," said Dr. Peter Beilenson, president and CEO of Evergreen Health Cooperative Inc., which formed in November and plans to offer two types of plans on the exchange.
Other insurers, including CareFirst BlueCross BlueShield and Kaiser Foundation Health Plan of the Mid-Atlantic States Inc., could not be reached for comment late Friday. Nine carriers in all had proposed plans for sale on the exchange, though they were represented by five owners.
Beilenson, the former health commissioner for Baltimore and more recently for Howard County, said it was unfortunate that Aetna decided to drop out. The point of the health care law is to increase competition so consumers have more choices and more affordable care, he said.
On the other hand, he noted, Aetna's action also means his new insurance company will have less competition.
Vincent DeMarco, president of the advocacy group Maryland Citizens Health Initiative, said Marylanders still will have plenty of choice within the exchange even without Aetna.
"There are seven carriers left providing a broad range of services, which we think are at reasonable rates, especially with the subsidy that the federal government is providing," he said. "Marylanders will be well-served."
DeMarco said he thought the commissioner did the right thing on setting rates.
"We wish as many as possible would have stayed," he said. "The point is the rates have to be fair for consumers. The commissioner came up with some fair rates."
Baltimore Sun reporter Eileen Ambrose and Reuters contributed to this article.
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