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News: 2013 Press Release
For Release: July 2, 2013
Media Calls Only: 916-492-3566
Second major health insurer pulls out of California market
Insurance commissioner concerned that reduced competition hurts consumers required to purchase health insurance in 2014
SACRAMENTO - Insurance Commissioner Dave Jones today expressed concern about the negative impact on consumers as a second health insurer - United Healthcare -- announced its exit from California's individual market.
"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."
Aetna had approximately 60,000 people covered by individual policies as of March 31, 2013, and it projects it will have approximately 50,000 people covered by individual policies at the end of 2013, when the company exits the individual market. United Healthcare, through its subsidiary PacifiCare, had approximately 10,000 individual policyholders late in 2012. Policyholders from both companies have been informed they can keep their existing health insurance until December 31, 2013. Aetna and United Healthcare policyholders will be able to purchase health insurance from other health insurers inside and outside the new California health benefits exchange.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.