Among the contributors to administrative cost growth: information systems were responsible for most of the mix-adjusted growth, though sales and marketing costs grew fastest. Finance and accounting, as well as corporate executive costs declined.
The report looked at 19 Blues plans serving 34.1 million members.
Aetna, UnitedHealth to Drop Individual Coverage in CA
The decisions will leave about 60,000 individuals looking for new coverage just as California’s health insurance exchange, Covered California, kicks into gear. Considering their small market shares, it is likely that both insurers decided it was too tough to make a buck in the individual market as healthcare reform requires coverage of pre-existing condition and removes coverage limits.
David Jones, commissioner of the state’s Department of Insurance is not amused. "…their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers—Anthem Blue Cross, Blue Shield of California, and Kaiser—which means an increased likelihood of even higher prices from those health insurers downstream," he stated in a press release.
Jones added that a tax break available to their competitors may be contributing to the market change. “… The special tax break that California law gives to Anthem Blue Cross and Blue Shield of California… has allowed and continues to allow those two companies to avoid paying $100 million in state taxes a year. Aetna and United Healthcare don't get the special tax break… so they faced a major competitive disadvantage in California."