Aetna is pulling out of the individual health insurance market in Colorado, stopping writing new policies and canceling existing ones, we reported here yesterday. Now Karl Rove reports on two other insurance companies that are responding to ObamaCare by getting out of the health insurance business: "Providers such as Guardian Life and the Principal Financial Group are dropping their health-insurance businesses."
Sure enough, Employee Benefit Adviser reported January 28:
Guardian Life will withdraw its medical insurance product line in all states, and will wind down its existing business over the next two years. The decision was announced in a Jan. 25 e-mail to brokers from Scott Dolfi, Guardian's E.V.P. of Business Operations.
The carrier will drop its group medical plans, both self-funded and fully insured, as well as its prescription drug plans and individual medical coverage.
A New York Times article on October 1 about Principal Financial's decision to get out of the health care business concluded:
"It's just going to drive the little guys out," said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation's largest health insurers.
Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. "It's just the UnitedHealthcare full employment act," he said.
As someone said to me, "You think health care is expensive now, just wait until it's 'free.'"
There's nothing wrong with some creative destruction, or with a firm deciding to exit. It'd probably be better for consumers, though, if there were some new entrants to the market to replace some of those leaving.