UnitedHealthcare won’t compete in Connecticut’s insurance exchange after all.
After initially indicating it would offer health plans in the state’s online insurance marketplace set to open Oct. 1, the Minnesota-based insurer, with major operations in Hartford, has had a change of heart.
Kevin Counihan, the CEO of Access Health CT, said UnitedHealthcare officials recently informed him that they don’t plan to compete in the Connecticut market, at least for now.
The decision reflects a growing trend among larger U.S. health plans which are taking a cautious approach to insurance exchanges. Insurers remain wary of plan pricing and profitability and about just how many potential customers will actually shop for coverage through exchanges, which are a key part of the federal health care reform law.
As a result, insurers are choosing to participate in only a limited number of exchanges in states where they have large market shares in the individual and small group markets.
UnitedHealthcare isn’t a big player in either of those businesses in Connecticut, Counihan said.
“Everyone is taking a cautious approach right now,” Counihan said.
UnitedHealthcare joins Cigna as the only other health insurer currently doing business in the state that has chosen not to play in the exchange.
That means Access Health CT will likely open for business this fall with four health plans offering coverage to individuals and small businesses: Anthem, Aetna, HealthyCT and Connecticare.
Only HealthyCT, however, has actually submitted plans with rates to insurance regulators for approval.
Despite the recent decision by United, Counihan said he is still happy with how the exchange is shaping up, especially considering the short timetable allotted to get it up and running.
Exchange officials said they hope to attract 130,000 customers in the first year, but about 30,000 of those enrollees will likely be eligible for expanded Medicaid coverage.
“If we were to get those four insurers at the outset, I think we’ve got terrific competition,” Counihan said.
Counihan said he is also hearing from other nonprofit health plans in New England that are interested in getting into the Connecticut market, but that won’t happen for at least a year or two.
Also Massachusetts’s Harvard Pilgrim Health Care, which hoped to compete in Connecticut’s exchange on Jan. 1, is delaying its entrance into the market.
Getting buy in from the insurance industry is a make or break issue for the exchange to have a shot at being successful.
Insurers faced a Jan. 4 deadline to notify Access Health CT of their intent to participate in the state’s exchange.
Five health insurers — Anthem, Aetna, Connecticare, UnitedHealthcare, and HealthyCT — originally notified Access Health CT that they plan to offer coverage within the exchange.
Cigna, citing its small market share in the individual and small group markets in the state, said it didn’t see enough pay off to compete. UnitedHealthcare felt the same way.
UnitedHealthcare spokesman Ben Goldstein declined to comment for this story. But the firms CEO Stephen J. Hemsley told investors during a Jan. 17 conference call the company would compete in only 10 to 25 exchanges.
“The level of interest in exchanges will be driven by how we assess each local market, how the exchange and its rules are set up state-by-state and our market position relative to others in the market, as we see it today and as we evaluate it going forward,” Hemsley told investors.
The other issue, of course, will be whether or not health plans offered in the exchange will be affordable.
The next few weeks will be a crucial time for Connecticut as insurers submit to state regulators their plans and rates for approval.
Many observers are expecting significant rate increases for individuals and businesses and the national Society of Actuaries recently projected that underlying claim costs will lead to premium increases of nearly 29 percent in Connecticut, according to the Connecticut Health Policy Project.
HealthyCT’s plans factor in a 7.5 percent rate increase over 2012 medical costs. The insurer is proposing plans for the individual market with an average monthly premium of $427.35.
For the small group market, which includes businesses with 50 or fewer workers, HealthyCT is proposing plans with an average monthly premium of $445.
Those rates, however, could vary significantly from one person or business to another, depending on the richness of the benefits plan they choose.
