Another Carrier to Exit Insurance Markets; 840,000 to Lose Their Current Coverage
Both the New York Times and the Wall Street Journal have stories this morning on the exit from the health insurance marketplace of Principal Financial Group, which currently covers about 840,000 lives. All these individuals will have to change their current coverage in the coming months as their policies expire.
More troubling however are the concluding paragraphs of the Times piece, which suggests that Principal’s decision may be one of many made by smaller carriers to exit the health insurance marketplace thanks to the health care law:
More insurers are likely to follow Principal’s lead, especially as they try to meet the new rules that require plans to spend at least 80 cents of every dollar they collect in premiums on the welfare of their customers. Many of the big insurers have been lobbying federal officials to forestall or drastically alter those rules.
“It’s just going to drive the little guys out,” said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation’s largest health insurers.
Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. “It’s just the UnitedHealthcare full employment act,” he said.
Democrats claimed that their unpopular health care law would protect Americans from abuses by “Big Insurance.” But if the overhaul leads to industry consolidation – and higher prices as a result – how effective can it be?