The nation's largest insurer could be shut out from the largest state insurance exchange, as regulators pursuing an active purchaser strategy try to nurture a loyal group of underwriters for the long-term.
UnitedHealth Group left California's individual market in 2013, but kept its 3 million-plus member employer-sponsored plans in the state, and largely sat out the first year of the Affordable Care Act exchanges, selling in only five states.
Now, after expanding to 23 states for 2015, United wants to sell individual plans once again in California and its public exchange, Covered California.
Except that Covered California officials don't seem to want UHG there -- or any new entrant that sat out these past two years and wasn't willing to take a bet on the new subsidized market.
In a testament to the regulatory power of Covered California, whose private health plan enrollment is nearing 1.5 million, the exchange's board adopted new rules for the 2016 plan year that outline requirements for existing and new carriers that limit new entrants like UHG to selling in a handful of underserved areas.
"United or other plans that were in the market in 2012 should have a higher bar" to joining the nation's largest state exchange, Covered California executive director Peter Lee said at a board meeting, the LA Times reported. "We think the health plans that helped make California a national model should not be in essence undercut by plans that sat on the sidelines."
For 2016, Covered California "will give first consideration to 2015 contracted QHPs (qualified health plans) who propose to expand coverage to the same counties/regions where there are less than three carriers before accepting new entrants," Anne Price, the exchange's director of plan management, said in an outline of the rules.
The selection will also be based on how the insurers are increasing consumer choices across geographies, provider networks and premiums, Price said.
But new entrants that are neither existing Medicaid managed care plans nor newly licensed in the state may apply for inclusion only in exchange regions 1, 9, 11, 12, and 13. Those are predominantly rural, agricultural and lower-income regions in northern, southern and central California, spanning 34 counties "where currently members have limited plan choice" from less than three insurers.
So far UnitedHealthcare has not yet commented on the regulations or what action it may take, but their cause has a somewhat unlikely supporter -- California insurance commissioner Dave Jones, a longtime critic of for-profit insurers in times of premium increases who recently lost a campaign to win rate veto authority.
Covered California "ought to be encouraging, not discouraging, new insurers to come in," Jones told the LA Times. "Covered California's decision to substantially restrict where new health insurers can sell in 2016 protects the big health insurers' market share and hurts consumers by denying them additional choices."
Elsewhere in its 206 regulatory plans, Covered California is preparing for a number of initiatives aimed at living up to the states progressive image.
For silver tier plans and cost-sharing reduction-eligible plans, the exchange will require facility and physician fees to have a consistent application for deductibles and coinsurance, while imaging coinsurance is being replaced by a $250 co-pay for CT, MRI and PET scans.
In the complex benefit area of specialty drugs, Price said that exchange staff is going to "work with regulators, health plans, and advocates through an ad hoc committee to review the current specialty drug designs across all metal plans to insure consumer access for appropriate pharmacy treatment for chronic conditions."
After the 2016 QHP application period, she said, the exchange may also ask for alterations. "If further changes are recommended to the specialty drug benefit design, regulations may be amended and plans will be asked to adjust pricing as appropriate."