Aetna Pulls Out Of California Individual Insurance Market In Response To Obamacare

Tyler Durden's picture

If Obamacare's stated goal was to broaden the health insurance market, give more options to consumers, and generally lower the cost of health insurance, courtesy of the IRS' flawless execution of yet another unprecedented government expansion, it may be in for a tough time. Because while on paper every statist plan of centrally-planned ambitions looks good, in reality things usually don't work out quite as expected. Case in point the news that Aetna will stop selling health insurance to individual consumers in California at the end of 2013, in advance of Obamacare's complete transformation of the insurance market: a transformation which just incidentally may see most private health insurance firms follow in Aetna's steps and the emergence of a single-payer system along the lines of the British National Health Service. A government-mandated and funded system which, needless to say, crushes private enterprise, and ends up costing far more for all involved than an efficient market based on individual wants, needs and capabilities constantly in flux.

But that's ok - there is an administration which is smarter than the entire market, and a Federal Reserve which will monetize any deficit funding, and the only trade off is making the already ridiculous US federal debt ridiculouser.

For more irony we go to the WSJ which informs us that that "pullout is likely to draw attention as California has become a focus of national debate over the law's impact. Supporters, including President Barack Obama, who highlighted the state in a recent speech, argue that it has shown the success of the health overhaul in encouraging competition and pushing down prices."

If in some parallel socialist universe, the exit of competitors ends up boosting competition, than yes, we agree. In this one, however, things are a little... different.

For now, Aetna is just the start. A relatively small start:

Aetna said it currently has about 49,000 individual policyholders in California. In 2011, when it had substantially bigger membership, it was the fourth-biggest player in the state's consumer market, with about 5.2% of the plans sold that year, according to a report from Citigroup Inc.


Aetna isn't one of the 13 insurers participating in the state's new consumer insurance marketplace set to launch this fall under the federal law. Like several other major national carriers, it has said it would join only a limited number of these exchanges. A carrier can still offer consumer plans without being in the exchange.


Aetna said it will continue selling health insurance in California to employers and Medicare beneficiaries, as well as dental and life-insurance products. The insurer said it is "fully committed to serving the needs of our 1.5 million members in the state." A company spokeswoman declined to comment about the reasons for Aetna's individual-business withdrawal.

As long as those members aren't on individual insurance: those members will have to find a different provider of insurance.

People who currently have Aetna individual health coverage will have to find plans with other carriers by year-end. That might be easier because of the federal health law's requirements that insurers no longer decline coverage or set premiums based on people's health history, but still, "it's going to be confusing" for Aetna policyholders, said Ken Fasola, chief executive of HealthMarkets Inc., parent of insurance agency Insphere Insurance Solutions. His firm plans to send written notice to affected clients, then follow up with calls and, if wanted, visits.

Aetna is just the first to crunch the numbers and realize that one indeed has to pass a law first to find out how much money will be lost - by private companies - as a result.

The health law is expected to expand the individual insurance business, but the new coverage rules will also mean major changes. Also, in the new exchanges, consumers are expected to focus closely on costs, particularly monthly premiums. Insurers may find it tough to compete if they don't have scale in a particular market, partly because they can't match the prices that competitors win from health-care providers.

As for the "model" assumptions behind Obamacare, it is likely too late to clarify that one does not get strong competition in an artificial marketplace in which the service providers are dropping out one by one.

The Obama administration has highlighted its expectation that the new health-insurance marketplaces will generally boast strong competition, with around 90% of consumers buying their own plans living in states where there would be products from at least five insurers.


But in at least some places, the offerings will be limited. In Washington state, for instance, nine insurers bid to sell plans in the individual market but only one carrier, Kaiser Permanente, bid to sell a small-business plan through the exchange in some counties, forcing Washington officials to cancel plans to run a full small-business exchange for the first year.

So instead of "strong competition" the end results was a government-enforced... monopoly. And guess who has all the pricing power in a monopoly.

Oh well, such is life under "central-planning" - the end result is always complete disaster, but at least the intentions to promote "fairness" were quite noble.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Hedgetard55's picture

Barry Choomboi Care was designed to implode the health care system and usher in single payer, total government control over your pathetic, worthless ass. 

DaddyO's picture

As long as Cali was easy, Aetna was along for the action, now things have gone the way of the easy girl who got religion and more leg for you.


BoNeSxxx's picture

The Obama Shit Show marches onward.

All aboard.

Spider's picture

Most ZH stories are good but this is a little overdramatic - 49,000 policies?  Thats nothing...

ZerOhead's picture

What is this guy smoking?

American private and public healthcare costs are the highest in the world... 18% of GDP.

The Brits public system covers everyone at roughly half the cost...

LetThemEatRand's picture

"The Brits public system covers everyone at roughly half the cost..."

But everyone is dying over there!!!!  Look out!  Everyone is dead from lack of private health insurance!!!!!!!!

ZerOhead's picture

You're right... They must all be dead because of the underfunding which is what brings down their costs so much...

$8,362 per person or 17.9% GDP in the U.S. where everyone is healthy and fit...

$3,480 per person or 9.6% GDP in the U.K. where they let them die like flies...


And to add insult to injury the Brits have 27.43 doctors per 10K citizens while the U.S. has 10% less at 24.22 per 10K, and longevity is a year greater in Britain.

Of course the American socialist/fascist system is a lot more fun cuz they hand out way more pills...


piliage's picture

The current US system is the worst of both worlds, it guarantees public subsidy with no or limited cost controls. However, what has been lost in the debate is the structure of the European systems and how they differ from what was passed in America. Obama care centralises all programs in Washington. Can you imagine how screwed up EU healthcare would be if it was ran by the mental dwarves in Brussels? The states should have been left to find their own solutions to health care and Obamacare will be a mess as it will be yet another example of a bloated federal cluster-fuck.

One World Mafia's picture

Socialized healthcare is very efficient because it kills off the sick leaving fewer people who need treatment.  UK’s socialist healthcare system kills 130,000 patients a year and is denying treatment to elderly patients who are not dying. Babies too.

Look forward to death panels America.  Their socialized system is worse than ours. Before the govt got involved America had a great health care system.  Ron Paul says no one went without health care and he lived it.

buyingsterling's picture

The left hates the elderly (except for their votes) because they're generally done being tax donkeys.

The cost of health care in the US rose along with inflation until the government got heavily involved in the 1960s. Like everything else the criminal government touches, the system then started to go to shit.

A sane system would outlaw comprehensive insurance and make only catastrophic insurance legal. People with money would have to shop for best service/prices, and the poor would have to be given money for medical savings accounts, but even they would then have an incentive to keep prices down and be healthy, since they'd be able to keep for themselves whatever they don't spend.

Supernova Born's picture

Once the need for the theatrics (you know, like privacy) of voting are done, the expensive and less energetic geezers will be the first thrown under the bus.

GetZeeGold's picture



Welcome to the death panel green room.....please take a number.

Supernova Born's picture

Somehow the fairness of geezer Obama voters being thrown under the death bus just the same makes it somehow less horrific.

All the self-centered geezers have to die regardless of who they vote for...Obama voters will be offered a mail in ballot in addition to their big morphine death pill. (you were alive when you voted/signed and dead people can't go to jail)

Sorry, geezers, you are obsolete and Obama has 2 new illiterate immigrants to replace you at the ballot box.

GetZeeGold's picture




I'm all for accelerating the extinction process of a group of people that elected a governor with the nickname of Moonbeam.

economics9698's picture

The reason the US system is so costly is the federal, state, and local governments give the health care industry $1.1 trillion (2012) in additional money through various programs.

If you gave Americans $1.1 trillion to spend on cars and told them they had to pay 12 cents on the dollar when they bought a car what the fuck do you think would happen?


As for the British system its death panels and pretend heath care.  It’s a failure anyway you look at it.  Corruption, inefficiency, and a lot of pretend care.  Maybe the children get good care but everyone else doesn’t.  I pray the children get some decent care over there.

As for the US system the politicians want that 18% of the GDP to skim off the top like Social Security.  They could care less about the service to the public, and it will get much worse if the system wasn’t about to implode from the debt we already have.

What would happen is there would be less care for the 18% of the GDP, and more profit and corruption for the elite politicians and their owners.  Government is a criminal organization and the sooner people realize it the sooner we can get back to 100% private care.

Peter Schiff points out health insurance before Medicare was about $2 to $5 a month.  About $40 today.


The British/American argument is idiotic, only a 100% free market will deliver quality health care at a fair price, all other systems will fail.

mess nonster's picture

Take care of your own fucking health. Don't smoke, don't drink to excess, don't eat meat, fast food or junk food, excercise, drink lots of water, get some sleep...

Why in the fuck should I pay for your bad habits? Under insurance, that's what I do. Under Obamacare, that's what I do.

If we really believed in competition, we'd OUTLAW medical insurance. Maybe then prices would decline to an affordable level based on real market forces. Insurance is the single biggest market distorter in medical costs.

That's why I pay a 50% or more DISCOUNT for medical care using CASH. Because Insurance jacks up the fucking price.

Fuck insurance, and Fuck Obamacare.

onewayticket2's picture


You're missing the point.  AETNA is a player in the market.  obamacare's objective was to INCREASE competition.  it stands to reason that the implementation of obamacare would foster a player like AETNA's ability to compete in the biggest market in the USA.  the result should be them investing in California, not divesting. 


but it did the opposite.....just like so many other liberal policies, it accomplishs the opposite (intentionally?) of the name. 


The STATED goal by obama (10 yrs ago) was single payer.   this is all going according to plan.



the 'Fairness' Doctrine and the "affordable" care act

jbvtme's picture

"healthcare" is the biggest scam to curse this planet.  from vaccinations and circumcision to vitamins and chemotherapy. all of it is fake. the body is the most ingenious healing machine ever created. it is a divine masterpiece.  take control and nurture it.

johnQpublic's picture

i got to see a doctor who spoke english at the hospital this morning


of course i would not have been at the hospital if my indian primary care doctor hadnt prescribed me medication that i am allergic to....says so right in the file...a generic name doesnt change the content


so i have been poisoned by medication now twice in ten days

gotta love the american healthcare system

cant wait to get the bill now that our healthcare plan does not actually cover anything including prescription drugs any more

its just like my pre healthcare having days, except the costs for care are higher now and we get money deducted from our checks for a plan that does nothing

Mandalini's picture

You are making an incorrect assumption that Aetna was a competitive plan.  Obamcare is increasing competition by shutting down the Aetna scam.  It was actually not insurance but rather a pre-paid plan.  In other words Aetna took no risk in writing coverage, as they were guarenteed to never pay out more than they collected. $5k in premiums would get you $5K in coverage. Obamacare outlaws these scams by outlawing Annual Caps.  

onewayticket2's picture

obama himself said the objective was single payer.  that's the opposite of competition.

yabyum's picture

And wear a helmet and use sunsceen...Damnit.

BeetleBailey's picture

...and FUCK every shit-eating politician that voted for it. A special kick in the cunt to Nancy Pelousy for her part.


and FUCK the bastards and bitches that wrote the piece of garbage "affordable care" act in the first place.

astroloungers's picture

I greened you, I agree with you.....I do everything you rant about in excess.

Nexus789's picture

You have no idea. There no such thing as a 'free market'. All markets are regulated and controlled in some form or other.

You might try actually reading something about health economics. Try reading 'Uncertainty and the Welfare Economics of Medical Care' - Kenneth J Arrow (1963). It is impossible to have a free market heath system without supporting 'structures' as Arrow concludes.

As for the so called socialised systems I've lived in a number of countries that have them. One of the main reasons for bankruptcy in the US is health costs - no one I know in our miserable socialised system has lost a home or a business through health costs. A massive cost to a community on top of the inefficient health care system in the US. I'm also able to tap into private health care providers. However, the health insurance providers have to work hard to get my money

Nexus789's picture

You have no idea. There no such thing as a 'free market'. All markets are regulated and controlled in some form or other.

You might try actually reading something about health economics. Try reading 'Uncertainty and the Welfare Economics of Medical Care' - Kenneth J Arrow (1963). It is impossible to have a free market heath system without supporting 'structures' as Arrow concludes.

As for the so called socialised systems I've lived in a number of countries that have them. One of the main reasons for bankruptcy in the US is health costs - no one I know in our miserable socialised system has lost a home or a business through health costs. A massive cost to a community on top of the inefficient health care system in the US. I'm also able to tap into private health care providers. However, the health insurance providers have to work hard to get my money

disabledvet's picture

"we already have death panels we might as well have the healthcare to go with it." obviously this isn't a serious work of journalism. 47,000 in California? with a population of 40 million? my question revolves around whether or not this is Federal or State controlled. If the IRS is running the program obviously its Federal controlled...but so far the whole thing looks like total chaos. be interesting to see what the result is.

GetZeeGold's picture




With no new supply of doctors and thousands of new patients....the only way you'll get any free heath care is if you kill the people ahead of you in line.

G-R-U-N-T's picture

"Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others."

-Ayn Rand


 "I will cut taxes -cut taxes- for 95% of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class."

-Barack Obama

What we have here is a liar, cheat and a thief!

RaceToTheBottom's picture

"What we have here is a liar, cheat and a thief!"


Agreed, Ayn Rand is all those things and also cheated on her husband.  Not sure why "fanatiques" want her as their leader.  Anyone can write dimestore books

BoNeSxxx's picture

I don't know that Rand's well known personal hypocrisies detract from her philosophy so much... And cheating isn't contrary to her writing - most of her characters did it.  Her taking Social Security benefits in her latter life however is anathema to everything she wrote.

That said, you can't compare her protagonists to today's kleptocrats and oligarchs.  In her view, high moral character was somewhat assumed - an assumption that hardly applies to today's captains of industry.

jwoop66's picture

I don't buy that particular arguement;  If I am FORCED to pay in to the system all my life, I will fill out the paperwork when I can to get whatever benefit there might be.    I still think it is an idiotic system.  I would back out now if I could, and let them keep all the money they took at this point(I am 46).   I can't back out, however.  In twenty years(hypothetically- I know it wont be there) I will fill out the form to collect.   Until then, and after; I will still openly declare I believe it to be a stupid, criminal govt scam. 

TWSceptic's picture

RaceToTheBottom you're an imbecile. This is not an insult, it's a scientific term for someone like you, based on your comment.

@BoNeSxxx watch this video for an explanation of why (according to Rand) it's morally justified to take social security even if one disagrees with it:

G-R-U-N-T's picture

Nice RTTB. Rand had a way of pulling covers like no other. Brilliant observationlist and the clergy, republicans and democrats suffered her objective realism to a point of embarassment. So I would suggest you get your head out of your ass and accept reality or perhaps you live in an alternate reality not knowing you inflict pain on yourself while believing in an image of self destruction, bitch!

hivekiller's picture

Rand's books were her personal fantasies much like Woody Allen's films. Every heroine was Rand - although much better looking. She was a thug and totalitarian in real life. However she did affirm the right of the individual to retain the product of their own labor rather than have it taken from the state using a combination of force and guilt.

merizobeach's picture

"The left hates the elderly"

If you're going to make sweeping, meaningless generalizations, why stop there?  The youth hate the elderly (because, of course, the elderly hate the youth); foreigners hate the elderly (because, of course, the elderly hate foreigners); and of course, the elderly hate each other because they're of all different ethnicities.  There are many more reasons to hate the elderly, too: they comprise most of the government; they have elected the most politicians; they fought in and paid for, with their taxes, the most wars; they seek to impose their obsolete thinking and traditions on freer-thinking, less-bigoted younger people; and now they are all societal parasites with the endless entitlements they've voted for themselves.  So, yeah, if we're going to accept your original premise, then there's no stopping there.  Your vision of a 'sane system' sounds like just another psychotic statist nightmare.

Oldrepublic's picture

too few GP's in US due to tight control by AMA, lots of easy solutions to get more medical aid to US consumers., i.e., easing of laws on use of nurses, bringing in more trained foreign doctors, use of medicine by telephone etc.

augustusgloop's picture

Nice free market in the US vs UK

UK has +2 years of life expectancy  (81 vs. 79 in US) for 1/2 the cost (as percentage of GDP). But all the comments on ZH are  death panel socialism blah blah blah blah. Like crony capitalism is going to do any better. And how is keeping the underclass from having any healthcare different from a income level based death panel.

Marco's picture

Ideological purity is more important than outcomes ...

I wish the social darwinists here could be a little more honest to others and themselves about what they are. Charity never created a healthcare utopia in the past and in the modern day when the percentage of GDP it consumes is so much higher (regardless of what happens to waste, eating habits etc it's still going to have costs far in excess of what it was a century ago) it will result in even more unsociable results.

fuckitall's picture

"Socialized healthcare is very efficient because it kills off the sick leaving fewer people who need treatment. "

Matched by death of rights and liberty here in USSA, reducing people's deisre to keep living.

I see darkness ahead.  Less incentive to keep going. Somebody said "give me liberty or give me death".  I suspect more Americans will start feeling that way next few years watching last fragments of rights and liberty disappear.  

I suspect some Germans felt that way in 1939 - 41, just not worth it anymore, and Hitler was nationalist, concerned about Germans' well being, rebuilding Germany, making things better, not marxist/communist coming here, against the people, tearing down the nation. 

Yep, we'll have more reasons to say just not worth it anymore, and those "death panels" might get less resistance from senior citizens than they think.  

"Go ahead pull the plug, America I knew is gone, nothing left to live another few years for."

I suspect that's how I'd feel in that situation.

jeff montanye's picture

and the brits are hardly alone.  nearly all of the advanced world pays about half of u.s. health care costs for arguably better average outcomes.  obamacare may well be shit (obama certainly is), but the u.s. healthcare system, except for the very rich and (retired) congressional staffers, could be way better.

underman's picture

Most of Europe lives 2-3 years longer than Americans.

knukles's picture

Another triumph of socialist expansion.
You need not make any more decisions, peasant!

tankster's picture

Yeah, our current system works great, unless your middle class, and not in a union...

One World Mafia's picture

"Doctors say Fenton is an example of patients who have been condemned to death on the Liverpool care pathway plan. They argue that while it is suitable for patients who do have only days to live, it is being used more widely in the NHS, denying treatment to elderly patients who are not dying."

The untold story.

One World Mafia's picture

UK’s socialist healthcare system kills 130,000 patients a year

If Britain’s socialist healthcare system is a benchmark for what we can expect from Obamacare, hundreds of thousands of elderly patients face being euthanized through “assisted death” techniques designed to cut costs.

Parrotile's picture

Using Infowars as a "serious" referemce source?? Credibility problems???????

If you and the rest of the cretins who now seem to populate ZH want to compare "Like with Like" - just have a quick check on the post-op infection rates in the UK's PRIVATE Health "Industry" - and compare these "Private is best" rates with the good old "Socialist is BAD" NHS.

You'll be in for a little surprise. And you can rest assured that the "disclosed" Private sector infection rates are (and always have been) under-reported.

But, hey, it's YOUR money, so go ahead and spend it exactly as you wish. Just DON'T expect the "Inferior State System" to pick up the pieces when your "Private" provider decides enough's enough (as happens DAILY in the "even more crappy" Australian "Public in the pockets of the Private" Health System).


One World Mafia's picture

Infowars is a wonderful source. They not only write their own richly referenced pieces, unlike you - not that I would trust your sources - they carry and link to others.  But if it would make you feel better:

Killing the Elderly Is Old News for Britain's NHS

We don't really have a private system with the govt involved in such a large part of our lives and driving up costs.

Cathartes Aura's picture

Infowars is a pre-packaged perspective, useful when you don't really want to do the real work of developing your own ideas based on your own research of "all sides"


works for some I guess.