By Caroline Humer
Aug 29 Aetna Inc has decided not to sell
insurance on New York's individual health insurance exchange,
which is being created under President Barack Obama's healthcare
reform law, the fifth state where it has reversed course in
The third-largest U.S. health insurer has said it is seeking
to limit its exposure to the risks of providing health plans to
America's uninsured, but did not give details about its decision
to pull out of specific markets.
"We believe it is critical that our plans not only be
competitive, but also financially viable, in order to meet the
long-term needs of the exchanges in which we choose to
participate. On New York, as a result of our analysis, we
reluctantly came to the conclusion to withdraw," Aetna
spokeswoman Cynthia Michener said.
The New York decision comes as states finalize the roster of
health plans that will be offered to millions of uninsured
Americans beginning on Oct. 1.
Aetna and its newly acquired Coventry Health unit, a
low-cost provider that caters to individuals and Medicaid
beneficiaries and provides private Medicare policies, still have
applications to sell coverage in 10 states, based on publicly
Michener said the full list of state exchanges where Aetna
will participate is still being finalized.
The new online insurance exchanges are the lynchpin of
Obama's healthcare reform, representing a massive technology
build-out that has run up against multiple delays and political
opposition in many states. In their first year, the exchanges
aim to provide coverage to 7 million uninsured Americans, many
of whom will be eligible for government subsidies.
Aetna's large competitors, such as UnitedHealth Group Inc
and WellPoint Inc, have also planned limited
entries into the new exchanges while they wait and see whether
they operate smoothly and whether enough healthy people sign on
to offset the costs of sicker new members.
"We've got this period where the exchange experience, the
exchange sentiment, and news headlines are probably not going to
be very flattering and that's not going to have a positive
impact on turnout," said Jefferies & Co analyst David Windley.
"Longer-term, those kinks will get ironed out, more people
will get comfortable and in (the next few years) more people
will be accessing their health insurance through an exchange of
some sort," he said.
Aetna signaled last month that it was considering
withdrawing some applications because of its purchase of
Coventry, which also had filed documents to sell insurance plans
on exchanges around the country.
"We have taken a prudent risk-based approach to both our
overall exposure and exposure within a given marketplace,"
Chief Executive Officer Mark Bertolini said on a conference call
with analysts at the time.
Since then, it has withdrawn applications in Maryland, Ohio,
Georgia, and Connecticut, where it is based. In Maryland,
Aetna's decision came after state regulators ordered the company
to lower rates dramatically from what it had proposed.
Aetna also has filed applications in Florida, Arizona and
Virginia, where the federal government will operate the
exchanges, and in Washington, D.C., which is running its own
Coventry filed applications to sell insurance in Florida,
Iowa, Kansas, Louisiana, Nebraska, North Carolina, Ohio and
Virginia, according to those states' insurance departments. Iowa
is working with the government on its exchanges while the rest
are being run entirely by the federal government.
Coventry withdrew its applications in Georgia and Maryland
when Aetna bowed out but it remains in Ohio. It also withdrew
earlier this month from Tennessee.
Aetna and Coventry may also have filed plans in other states
that have not released any information about participants.
Insurance plans in the 33 states that have defaulted to the
federal government exchanges must be approved by the Department
of Health and Human Services (HHS), and then insurers sign off
on them. Earlier this week, HHS delayed the sign-off deadline to
mid-September after originally aiming for early next
Michener said the company will continue to serve small
business and large business customers in New York and will offer
products to individual consumers outside of the exchanges.
Only 17,000 or so people in New York currently buy
individual insurance, but the exchange is expected to bring in 1
million people during the first three years. The exchange
announced insurance participants on Aug. 20. Aetna was not on