Insurer Jumps Ship, But Is The Health Law To Blame?The New York Times: The Principal Financial Group of Iowa will stop selling health insurance plans - which currently cover about 840,000 people who get coverage from employers - as provisions of the health overhaul take effect. "Principal's decision closely tracks moves by other insurers that have indicated in recent weeks that they plan to drop out of certain segments of the market, like the business of selling child-only policies. State regulators say some insurance companies are already threatening to leave particular markets because of the new law" (Abelson, 9/30).
The Wall Street Journal adds, "UnitedHealth Group Inc., the country's largest health insurer by revenues, Thursday agreed to renew the policies of Principal's roughly 840,000 members as contracts expire. Terms of the deal weren't disclosed. Analysts pointed to the agreement as a sign that big insurers could have a bright future gobbling up smaller firms' membership." One regulation that prompted particular concern about the future livelihood of small insurers is a requirement that plans spend 80 percent to 85 percent of the premiums they collect on health services (Johnson, 10/1).
Politico's Pulse, however, points out: "Principal was about to exit the medical market regardless of reform" according to Iowa's insurance commissioner Susan Voss. She said, "There's no correlation between health reform and Principal. They have been slowly decreasing the medical percentage of their revenue base for 10 years now, from something like 30 percent down to 3 percent. We knew a decade ago they were focusing on a different market" (Kliff and Haberkorn, 10/1).
The Associated Press: The "move will eliminate 150 jobs initially and more later," according to Prinicipal. "The medical business continues to be one that undergoes rapid change, which would mean investing additional capital into the business to be able to offer competitive products. For us, that just does not make sense," Principal CEO Larry Zimpleman said in a statement (Pitt, 9/30).
Minneapolis Star Tribune: "Customers will have the option to transfer to UnitedHealthcare upon renewal, so the addition of new members to UnitedHealthcare will be staggered." Meanwhile, "UnitedHealthcare, which is part of Minnetonka-based UnitedHealth Group, has a national book of business that covers the health insurance spectrum. Des Moines-based Principal offers group plans in the central United States" (Yee, 9/30). This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.