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California exchange rejects UnitedHealth

Nation's largest insurer wanted to join Covered California in 2016

The board of Covererd California rejected a bid from UnitedHealth to sell plans on the state exchange in 2016, according to the Los Angeles Times

Peter Lee, executive director of Covered California, told the LA Times that insurers are not free to enter the insurance exchange as they please and "undercut" rivals who have been involved since the beginning. UnitedHealth left California's individual market shortly before the health insurance exchange opened in 2013.

UnitedHealth's entrance into California's exchange wasn't a forgone conclusion, the LA Times reported in a second article. Consumer and labor groups opposed the move because the insurer has been selling skinny plans to large employers. Health Access and the California Labor Federation have asked Covered California to prohibit participating insurers from selling the bare-bones policies.

Plus, since UnitedHealth left the state's individual market, it typically would have to wait five years before returning to that business.

"We have been collaborating with regulators to determine the feasibility of 2016 market re-entry," Brandon Cuevas, chief executive of UnitedHealthcare of California, said in a letter to state officials, the LA Times noted. "We are prepared to enter the market statewide, in all regions for both the health benefit exchange and small business health options program, including those where little or no choice currently exists for consumers."

Meanwhile, New York start-up Oscar Insurance has also shown it's interested in selling plans on the California exchange starting next year, noted the LA Times.

The nation's largest insurer continues to expand its marketplace activity--UnitedHealth entered 24 exchanges this past year after initially taking a wait-and-see approach to exchange participation, FierceHealthPayer previously reported. And its request to join the California exchange made sense--1.2 million people signed up for exchange plans sold on Covered California during the first enrollment period and 228,000 have enrolled since Nov. 15.

California Insurance Commissioner Dave Jones opposed the exchange's decision to exclude UnitedHealth, as it limited residents' insurance choices, the LA Times said.  Many areas of 22 Northern California counties are limited to a single insurer, according to Kaiser Health News. This represents about 2 percent of Covered California's overall enrollment. 

To learn more:
- read the first and second Los Angeles Times articles
- here's the Kaiser Health News story

Related Articles:
UnitedHealth's exchange presence to increase competition
Some big insurers take 'wait-and-see' approach to exchanges
Stephen Hemsley: UnitedHealth will embrace exchanges in 2015
Exchanges can learn from enrollment success in California
Insurers to expand exchange offerings next year
Exchange enrollment: Tips from state marketplaces