As per Reuters,
) has pulled out of the New York health insurance exchange. We
believe that this decision by the company is driven by
disagreements over pricing.
Aetna has also withdrawn plans to offer coverage through
exchanges in Connecticut, Maryland and Georgia. Aetna is taking a
very conservative approach to the Health Insurance Exchanges
(HIEs), which we believe is a prudent strategy for preserving its
returns and reducing margin volatility. However, this
conservative approach could pressure Commercial enrollment trends
in 2014 and 2015
The HIEs are mandated by Health Care Reform Act. The insurance
exchanges for the individual and small group markets are
scheduled to be operational in 2014. The exchanges will be online
markets where consumers and small businesses can buy health
On these sites, these entities can compare all the available
plans and then purchase a suitable plan online. The HIEs are
estimated to provide up to 29 million people with affordable
health insurance by 2019.
The motive behind establishing the HIE is to offer affordable,
quality health insurance to small businesses and for low to
middle income Americans to purchase their own health coverage via
subsidies, competition and regulation.
These groups have been striving for a long time to obtain
affordable healthcare plans that meet the current standards of
health care under Obamacare. The online health insurance
marketplace is meant to remedy this.
From the health insurer's perspective, these exchanges will
create stiff competition. The revenue generation of the
participating companies will shrink because of decreased prices.
However, the players will have a wider access to the markets,
which will increase the company value.
UnitedHealth Group Inc.
), is also taking a very conservative approach to the HIEs. So
far the company has indicated that it will participate in 12
health insurance exchanges.
Other players, like
Molina Healthcare, Inc.
), are also participating in a number of exchanges.
AETNA INC-NEW (AET): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
To read this article on Zacks.com click here.