Insurance giant Aetna is sending strong signals that Obamacare is a major problem. Over the weekend the company announced that it would not sell individual insurance on the government-run exchange in Maryland. The state government had ordered Aetna to sell insurance below cost in the state. In a letter in reply, Aetna said that it could not do that, and therefore would not sell insurance in the state.
In an August 1 letter sent to the Maryland Department of Insurance, Aetna said the state’s requirement for rate reductions off its proposed prices would lead it to operate at a loss. The rate reductions include products from Aetna and Coventry Health Care, which it bought this spring.
“Unfortunately, we believe the modifications to the rates filed by Aetna and Coventry would not allow us to collect enough premiums to cover the cost of the plans, including the medical network and service expectations of our customers,” Aetna said in the letter to insurance commissioner Therese Goldsmith.
According to online documents, Aetna had requested an average monthly premium of $394 a month for one of its plans and the agency had approved an average rate of $281 per month.
Now Rare reports that a similar edict from the state of Connecticut is causing Aetna to abandon that state, too.
Before an insurer can sell health plans, the rates must be approved by state regulators at the Insurance Department. If the regulators deem the rates to be too high, the Insurance Department modifies them to a lower rate. In this case, Aetna did not accept the modified rates.
“This is not a step taken lightly, and was made as part of [a] national review of our exchange strategy,” Aetna spokeswoman Susan Millerick said in a prepared statement. “Unfortunately, we believe the modifications to the rates filed by Aetna will not allow us to collect enough premiums to cover the cost of the plans and meet the service expectations of our customers.”
The Insurance Department said Aetna’s price reflected a 10 percent assumed increase in medical and pharmacy services, and the department wanted that revised to 8.5 percent. The department also did not allow for an 8.1 percent risk adjustment. The department doesn’t allow risk adjustments in the first year of pricing.
Government bureaucrats are ill-equipped to set prices on anything, including complex insurance packages that have to take into account mandates to cover pre-existing conditions.
If the Republicans don’t make an issue of Obamacare’s multiple and massive failures in 2014, they don’t deserve to re-take the Senate.