On July 2, 2013 the California Insurance Commissioner Dave Jones verified that both United Healthcare and Aetna Insurance intended to exit from California's individual health insurance market by the end of 2013.
"United Healthcare's decision to exit the California individual health insurance market is bad news for consumers," said Commissioner Jones. "While both United Healthcare and Aetna have a very small share of California's individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers - Anthem Blue Cross, Blue Shield of California, and Kaiser - which means an increased likelihood of even higher prices from those health insurers downstream."
"One of the factors I believe contributed to this decision, even if the two companies are disinclined to acknowledge it, is the special tax break that California law gives to Anthem Blue Cross and Blue Shield, which has allowed and continues to allow those two companies to avoid paying $100 million in state taxes a year," added Commissioner Jones. "Aetna and United Healthcare don't get the special tax break provided to Anthem Blue Cross and Blue Shield, and so they faced a major competitive disadvantage in California.
"Policy holders from both companies will be able to keep their existing health insurance through the end of 2013. Policy holders with those companies will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange.
"United Healthcare's decision to exit the California individual health insurance market is bad news for consumers," said Commissioner Jones. "While both United Healthcare and Aetna have a very small share of California's individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers - Anthem Blue Cross, Blue Shield of California, and Kaiser - which means an increased likelihood of even higher prices from those health insurers downstream."
"One of the factors I believe contributed to this decision, even if the two companies are disinclined to acknowledge it, is the special tax break that California law gives to Anthem Blue Cross and Blue Shield, which has allowed and continues to allow those two companies to avoid paying $100 million in state taxes a year," added Commissioner Jones. "Aetna and United Healthcare don't get the special tax break provided to Anthem Blue Cross and Blue Shield, and so they faced a major competitive disadvantage in California.
"Policy holders from both companies will be able to keep their existing health insurance through the end of 2013. Policy holders with those companies will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange.
Medicare plans such as Medicare Advantage plans, Prescription Drug Plans, and Medicare Supplement Plans are not expected to be to be affected by the announcements from these companies.