Fifty-eight thousand Californians are about to learn just how hollow was President Barack Obama’s promise that “if you like your healthcare plan, you can keep your healthcare plan” under ObamaCare. That’s because two of the companies that offer individual coverage in the Golden State have decided to pull out of that market next year when the healthcare law’s individual mandate takes effect.
The latest departure from California’s individual market is UnitedHealth Group, Inc., the nation’s largest health-insurance company. “UnitedHealth said it had notified state regulators that it would leave the state’s individual market at year-end and force about 8,000 customers to find new coverage,” the Los Angeles Times reported Tuesday.
Just a fortnight earlier, Aetna, Inc., made a similar announcement, leaving its 50,000 individual-insurance customers in the lurch come January.
Both companies have a relatively small share of the individual market in California. UnitedHealth had two percent of the market, while Aetna had five percent. Both say they will continue to provide coverage in the group market, typically through employers.
“The business model of health insurance is fundamentally changing and some companies are willing and able to adapt,” Georgetown University professor Sabrina Corlette told the Times. “Given the limited market share those carriers had, UnitedHealth and Aetna have made the calculation that it required too much of an investment to change their strategy in California.”
The reason the business model is “fundamentally changing,” of course, is ObamaCare. “Starting Jan. 1,” wrote the Times, “the federal healthcare law forces insurers to accept all individual applicants regardless of their medical history and provide a comprehensive set of benefits with limits on patients’ out-of-pocket spending.”
In other words, ObamaCare “basically outlaws anything that follows the principles of insurance,” as Dr. Jane Orient of the Association of American Physicians and Surgeons told The New American in 2010. That, in turn, makes the insurance business unprofitable, especially in the individual market, which is expected to be flooded next year with individuals heretofore unable to obtain coverage because of their costly pre-existing conditions.
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