Aetna’s disquieting withdrawal from Colorado

Filed under: Opinion |

Last week insurance giant Aetna announced it was pulling out of the small-group market in Colorado in a move that, despite what Aetna tells us, is a blow to the state’s small businesses.

The insurance industry defines the small-group sector as businesses with one to 50 employees, and there are certainly a lot of companies that size in Colorado.

All told, the move will affect some 1,200 small businesses and 5,200 of their employees and their dependents.

Small businesses are facing a lot of challenges these days. They’re charged with leading the economic recovery when at the same time they’re the ones that have been most affected by the downturn.

They’re also the ones facing reforms in healthcare law that will require them to provide insurance to employees or pay a hefty fine.

No one really knows exactly how small business will be affected by these reforms, but most agree on one thing: it’s going to cost more.

Aetna’s departure means its former small-business customers will now have to scrounge around for another insurer.

State insurance officials said they’re confident in the structure of the state’s insurance market and that the affected companies will be able to purchase coverage from a host of other insurers.

But finding a new provider with comparable rates won’t be easy.

All this change causes a lot of volatility in a sector of our economy that needs the most stability.

A spokeswoman said Aetna’s decision was based on protecting its bottom line, saying the company “can no longer meet the needs of our customers while remaining competitive.”

That sounds reasonable but skeptics could view it as Aetna shucking its obligation to its policyholders.

Under state law, Aetna must stay out of the Colorado small group market until 2015. The law was instituted to keep companies from jumping in and out of markets, and causing all that volatility.

In light of this, the state should consider passing another law that requires insurers to remain in the market for a minimum amount of time in exchange for the right to sell their policies.