Aetna has withdrawn its application to sell individual health insurance plans through a public exchange after the state Insurance Department told the insurer its proposed rates were too high.
Before an insurer can sell health plans, the rates must be approved by state regulators at the Insurance Department. If the regulators deem the rates to be too high, the Insurance Department modifies them to a lower rate. In this case, Aetna did not accept the modified rates.
“This is not a step taken lightly, and was made as part of [a] national review of our exchange strategy,” Aetna spokeswoman Susan Millerick said in a prepared statement. “Unfortunately, we believe the modifications to the rates filed by Aetna will not allow us to collect enough premiums to cover the cost of the plans and meet the service expectations of our customers.”
The Insurance Department said Aetna’s price reflected a 10 percent assumed increase in medical and pharmacy services, and the department wanted that revised to 8.5 percent. The department also did not allow for an 8.1 percent risk adjustment. The department doesn’t allow risk adjustments in the first year of pricing.
Kevin Counihan, CEO of Connecticut’s health exchange, said consumers will have a broad number of choices even without Aetna. The goal of the exchange is to bring affordable, quality health care to Connecticut residents and small businesses, he said.
For consumers, the exchange, called Access Health CT, will be the only place where consumers may receive a federal subsidy to help pay for coverage. People who earn up to 400 percent of the federal poverty level can get a subsidy. The subsidies will be available to any individual making as much as $44,680 or a family of four making up to $92,200.
“It’s not even just the subsidy though,” Counihan said. “These exchanges are a new way of buying insurance. It’s a simpler way.”
The Hartford health insurer also is withdrawing its application to offer individual health plans through Maryland’s health exchange, though Aetna said it will continue to offer small-group plans on the exchange because Maryland requires its participation. Aetna also pulled out of Georgia’s exchange entirely.
Health exchanges are online marketplaces where people will be able to buy health insurance starting Oct. 1 for coverage next year. The exchange will be for people who don’t already have coverage through an employer or through government-funded programs such as Medicare and Medicaid. Health exchanges are a key part of the Affordable Care Act passed by Congress and signed into law in 2010.
“We continue our analysis of Aetna’s overall company strategy, including the impact of our Coventry acquisition upon our larger business priorities,” Millerick said. “This acquisition closed in May, after our exchange … application was submitted to the state.”
Aetna will continue to sell health plans to individuals, just not on the Connecticut health exchange. The company currently has about 32,000 individual customers in the state.
“We have appreciated the chance to work with the Connecticut Insurance Department for the past months on a variety of key issues regarding [Affordable Care Act] implementation,” Millerick said. “We will continue to work with the department and exchange leadership and will evaluate exchange participation in future years.”
Aetna isn’t the first to shrink back from original intentions to sell plans on the Connecticut exchange.
On July 26, ConnectiCare Benefits Inc. announced it was withdrawing its application to offer health insurance in the small-group market sold through Access Health CT. ConnectiCare President Michael Wise said at the time that the company needs to focus on the needs of individual purchasers and that the company is committed to the success of Access Health CT.
The remaining insurers selling health plans in the individual market through Access Health CT are Anthem Blue Cross and Blue Shield in Connecticut, ConnectiCare Benefits and Healthy CT. Remaining insurers in the small-group market selling plans through the exchanges are Anthem, Healthy CT and UnitedHealthcare.
Lt. Gov. Nancy Wyman, who chairs the Access Health CT board, said in a prepared statement: “People will still be able to choose from a very comprehensive range of quality, affordable coverage options offered through [Access Health CT]. This decision will not affect our reaching a goal that many of us have been working toward for a long time, and for which the people and businesses of Connecticut have waited long enough.”