UniCare’s Plan to Exit Va. Continues Strategy to Withdraw From Health Insurance Markets

UniCare, a subsidiary of Indianapolis-based WellPoint Inc., said it sent letters the last week of June to about 3,000 health insurance policyholders in Virginia informing them that it will discontinue coverage by the end of this year. The vast majority of policyholders have individual rather than group insurance and live in the northern part of the state.

The decision to exit the market is a continuation of a strategic plan announced by UniCare in October due to competitive pressures, said company spokesman Tony Felt. "It is hard to offer coverage at a competitive rate when there are two prominent Blue Cross & Blue Shield plans in Virginia that benefit from economies of scale," he said.

In October, UniCare said it would exit the commercial health insurance market in Texas and Illinois, also due to competitive reasons (BestWire, Oct. 29, 2009). UniCare has about 400,000 plan members in those two states combined, Felt said.

The company will continue to offer its other insurance lines, including life, dental, vision, disability and Medicare replacement products, he said.

In Virginia, about a third of UniCare policyholders will receive a letter from Anthem Blue Cross & Blue Shield, another WellPoint subsidiary, offering guaranteed-issue coverage with benefits and rates comparable to what they have with UniCare. The other two-thirds, however, reside in the territory of CareFirst Blue Cross & Blue Shield, so that Anthem will not be able to offer coverage to them, Felt said. Those individuals will have the option to go onto the open market, he said.

UniCare has operated its health insurance business primarily in the individual and small group markets, said Felt. Its membership has deteriorated in recent years as larger plans increased their market penetration, he said. The company's largest state presence has been in Texas and Illinois, he added.

UniCare's decision to exit the health market has nothing to do with federal health insurance reform, Felt said. "If we were able to compete effectively, we would clearly be staying in that market," he said.

In Texas and Illinois, the company entered into an agreement with Health Care Service Corp., which operates the Blue Cross and Blue Shield companies in those states, to offer guaranteed replacement coverage to UniCare's commercial and individual members.

Seven of UniCare's companies currently have Best's Financial Strength Ratings of A- (Excellent).

(By Ron Panko, senior associate editor, Best's Review: [email protected])