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May 02. 2013 10:56PM

Big insurers wary of entering new Obamacare markets

NEW YORK - The nation's largest health insurers are far from leaping at the chance to join new state health insurance exchanges under President Barack Obama's reform law, making it likely that some markets will have little or no competition next year.

These new insurance marketplaces are due to open their doors on Oct. 1 to enroll millions of Americans who have not been able to buy coverage on their own.

A key principle of Obama's health reform is that individuals will have a robust offering of insurance plans to choose from, and that competition for new customers in each state will help keep prices down for consumers.

But health insurers, some of whom fought the law before it was passed and continue to lobby to reverse parts of it, are wary. In recent days, executives at the four largest U.S. health insurers say they are likely to sell insurance plans on less than a third of the exchanges, reluctant to venture out beyond the states where they already offer coverage.

The Department of Health and Human Services did not provide a comment.

There are a number of reasons for caution, company executives say. These include a lack of clarity about the kind of prices they can charge and the number of plans they can sell on each exchange, the expectation that the program is only expected to reach about 7 million people nationwide in its first year and uncertainty over whether all of the exchanges will be ready in time.

As a result, heavily populated states where many insurers already sell plans now, such as California and New York, will have competing products for the exchanges when health reform takes full effect on Jan. 1. But states whose existing insurance markets have little or no competition, like Alabama and Alaska, may not see much of a difference, healthcare analysts say.

"We do think the uptake may be slower than maybe people thought six months ago or a year ago in terms of what is going on in the first year with the exchanges," Aetna Chief Financial Officer Shawn Guerin said.

Under the 2010 Patient Protection and Affordable Care Act, often called Obamacare, health insurance marketplaces must be available in every state in 2014.

These exchanges, which will enable all individuals and small businesses to buy health insurance, are expected to bring in up to 24 million people by 2016, according to the Congressional Budget Office.



No land grab on exchanges



UnitedHealth, the largest U.S. insurer, said it would end up in as few as 10 exchanges and only up to 25 maximum.

Aetna on Tuesday said that it was not planning a "land grab" when it comes to expanding through the exchanges and has submitted applications to offer plans in 14 states.

WellPoint, which operates Blue Cross Blue Shield licenses in 14 states, said it plans to enter exchanges in those states, but that there is uncertainty around timing of the overall rollout of exchanges.

Humana Inc. said it is participating in 14 states. Cigna said it will participate in a "limited" number of markets that it has already zeroed in on for growth.

WellPoint Chief Financial Officer Wayne DeVeydt said in an interview that the company is still waiting to hear how the states will handle pricing and ratings of applicants, how many competitors will be allowed on the exchanges in some states that plan to limit numbers and how many plans they can offer in others that are more permissive.




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