According to sources,
) has pulled out of the New Jersey health insurance exchange.
We believe this decision by the company is driven by
disagreements over pricing.
Most recently the Aetna announced its exit from the New York
HIE. It has also withdrawn plans to offer coverage through
exchanges in Connecticut, Maryland, Georgia, and West
Aetna is taking a very conservative approach to the Health
Insurance Exchanges (HIEs), which we believe is a prudent
strategy adopted to preserve returns and reduce margin
volatility. Recently Aetna indicated that it will limit its
2014 exposure to public health insurance exchanges (HIE) to 15.
In addition to this, Aetna will participate in 15, if not more
private exchanges, including its own. Final determination will
be, however, based upon each market's provider relationships,
regulatory environment, and other factors. 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 insurance. On these sites, they 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 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. Another player,
), has plans to participate in 14 HIEs in 2014.
Molina Healthcare, Inc.
) is also participating in a number of exchanges.
UnitedHealth carries a Zacks Rank #3 (Hold).
AETNA INC-NEW (AET): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
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