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Large Insurers Weighing Decisions on Exchanges

By Rebecca Adams, CQ HealthBeat Associate Editor

January 18, 2013 -- Statements this week by such large insurance companies as United Health Group Inc. that they will participate in some exchanges in 2014 mean these plans could offer some competition to the Blue Cross and Blue Shield Association of America, whose members dominate in many U.S. markets. But the commercial insurers are not rushing in to say how many marketplaces they will play in.

The top UnitedHealth executive said in a call with analysts last week that the company would probably offer plans in 10 to 25 exchanges. The company estimated that roughly 100 separate marketplaces offering individual and small-business plans could be offered throughout the country. Conceivably, each state could have two exchanges: one that serves individuals and one that handles business plans.

"The level of interest in exchanges will be driven by how we assess each local market," UnitedHealth Chief Executive Stephen J. Hemsley told investors on the call, a United spokesman confirmed.

Many insurers are trying to determine what steps they will take as the exchanges begin operating. Open enrollment is slated to begin Oct. 1.

Aetna expects to participate in up to 15 state exchanges.

"We will gain experience from that participation, assess the results and make decisions on where to participate in 2015," said Aetna spokesman Matt Wiggin. "Our decisions about which exchanges to participate in are based on a careful review of key attributes, such as our current market presence, our ability to offer strong networks and competitively priced products, and the regulatory environment in each state."

Humana officials did not return a call last week but have said in the past that they may participate in about 10 states.

Currently, Blue Cross and Blue Shield plans are well-represented in those markets and the Medicaid managed care market, in which Blue plans cover about 4 million Medicaid beneficiaries.

One insurance expert said the large insurers "are playing a little bit hard to get" with government officials who want them to participate.

"There's a little bit of a negotiating game going on right now," said Robert Laszewski, a consultant with Health Policy and Strategy Associates. "They are saying, 'Don't take us for granted.' That's smart."

For the large insurers, the individual and small-group market could present an opportunity if the exchanges work well and enrollment is robust. But they don't want to appear too eager, for fear that government regulators will impose too many burdens. The insurers know that if things go well, they can expand in future years.

But Laszewski noted that California, which has a fairly stringent regulatory climate, has said that 30 insurers have expressed interest in participating. In Oregon, a much smaller state that is further along than some other states in developing its exchange, about 16 insurers are interested.

"It doesn't seem as if the states will be short on insurance plans who are interested," he said.

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