IBJNews

Five individual insurers leaving Indiana

Back to TopCommentsE-mailPrintBookmark and Share

Five health insurers—including two of the nation’s largest—have decided to stop selling individual health insurance policies in Indiana—a trend that prompted the Indiana Department of Insurance to request a phase-in of key parts of the 2010 health reform law.

Hartford-based Aetna Inc. and Philadelphia-based Cigna Corp., which are the third- and fifth-largest health insurers respectively, have announced their departure from Indiana’s individual health insurance market.

In addition, Illinois-based Pekin Insurance, Michigan-based American Community Mutual Insurance Co. and New York-based Guardian Life Insurance Co. of America also have decided to leave the individual market. The five companies covered more than 20,000 Hoosiers, or about 10 percent of all those who have individual health insurance.

Their major complaint is about the new health law’s requirement that at least 80 percent of premiums be spent on medical bills. That new rule, known formally as a medical loss ratio or MLR, takes effect this year for all individual policies the insurers hold, not just new policies.

The insurers argue that the marketing and administrative expenses on individual policies are so high that they cannot transition so quickly to the new standard.

The Indiana insurance department worries more health insurers may follow—particularly small, local insurance plans and insurance plans operated by health care providers. One example of such a plan is Indianapolis-based Advantage Health Solutions, which is owned by four hospital systems, including St. Vincent Health and Franciscan St. Francis Health.

So Insurance Commissioner Stephen Robertson asked the Obama administration in May to grant Indiana a waiver that would delay the 80-percent rule until 2014. In late July, the insurance department disclosed the letters of withdrawal from the five insurers and a sixth from an insurer contemplating an exit.

“The imposition of the MLR requirement effective January 1, 2011, would be disastrous to many individual health insurance companies, their customers, and their employees,” Michael Abbott, CEO of Iowa-based health insurer American Enterprise Group, wrote in a Nov. 22 letter to Robertson.

He noted that, if companies such as his leave the market, customers with pre-existing conditions could be left without coverage until the health reform law requires that insurers take all applicants in 2014.

“By deferring the effective date to 2014,” Abbott recommended, “insurance companies will have the opportunity to renegotiate commission contracts, adjust pricing, modify existing products to comply with the new laws and regulations, and generally prepare to compete in the new environment.”

That is exactly what the Indiana insurance department is now trying to do.

The individual insurance market is already highly concentrated in Indiana, with Indianapolis-based Anthem, a subsidiary of WellPoint Inc., claiming about 65 percent of the market; its nearest competitor, Golden Rule Insurance Co., a subsidiary of UnitedHealth Group, covers about 10 percent.

Only 44 of the 63 health insurers operating in Indiana last year had been meeting the 80-percent threshold. The health reform law will enforce the rule by requiring insurers to refund customers’ premiums until their medical bills each year equal 80 percent of premiums.

If the refunds had been required last year, Indiana’s health insurers would have had to give back nearly $30 million, according to insurance department data.

ADVERTISEMENT

  • Look who doesn't know what their talking about
    So Hoosierconsumer you say that it shouldn't take an insurance company 20% to take care of the administrative side of providing insurance to consumers...huh? Interesting but apparently you've never been in business of any kind...I don't work for an insurance company and agree they make TOO MUCH PROFIT but 20% is unrealistic. Look at a restaurant, do you know how much their cost is for the food you receive? On average it is 25-30% of their overhead. So if a restaurant were to provide you food for 80% they would all go out of business! Take a business course at a college before you act like you know how much it cost to operate a business!!
  • REALLY?
    Five Health insurers want to spend more than 20% of your premiums on administrative costs (e.g., multimillion dollar executive bonuses) and the Indiana Insurance commissioner is in bed with them, helping them to get an exemption from a law that insists that 80% of premium be spent on (here's a new concept) ACTUALLY PAYING FOR HEALTH CARE and you're criticizing Obama? You must be an insurance company executive. Either that or a complete idiot.
    • Health Insurance
      Shortly, it will be just Anthem and be ready for the 30% + rate increases everywhere. Obamacare scares everyone...idiots and thanks to the liberals, we won't be able to afford coverage. Wait a minute, medicaid will take care of us. Won't have to work since welfare will also take care of us. Living the dream.

      Post a comment to this story

      COMMENTS POLICY
      We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
       
      You are legally responsible for what you post and your anonymity is not guaranteed.
       
      Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
       
      No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
       
      We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
       

      Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

      Sponsored by
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. By the way, the right to work law is intended to prevent forced union membership, not as a way to keep workers in bondage as you make it sound, Italiano. If union leadership would spend all of their funding on the workers, who they are supposed to be representing, instead of trying to buy political favor and living lavish lifestyles as a result of the forced membership, this law would never had been necessary.

      2. Unions once served a noble purpose before greed and apathy took over. Now most unions are just as bad or even worse than the ills they sought to correct. I don't believe I have seen a positive comment posted by you. If you don't like the way things are done here, why do you live here? It would seem a more liberal environment like New York or California would suit you better?

      3. just to clear it up... Straight No Chaser is an a capella group that formed at IU. They've toured nationally typically doing a capella arangements of everything from Old Songbook Standards to current hits on the radio.

      4. This surprises you? Mayor Marine pulled the same crap whenhe levered the assets of the water co up by half a billion $$$ then he created his GRAFTER PROGRAM called REBUILDINDY. That program did not do anything for the Ratepayors Water Infrastructure Assets except encumber them and FORCE invitable higher water and sewer rates on Ratepayors to cover debt coverage on the dough he stole FROM THE PUBLIC TRUST. The guy is morally bankrupt to the average taxpayer and Ratepayor.

      5. There is no developer on the planet that isn't aware of what their subcontractors are doing (or not doing). They hire construction superintendents. They have architects and engineers on site to observe construction progress. If your subcontractor wasn't doing their job, you fire them and find someone who will. If people wonder why more condos aren't being built, developers like Kosene & Kosene are the reason. I am glad the residents were on the winning end after a long battle.

      ADVERTISEMENT