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California Obamacare cool to UnitedHealth's sales pitch

An insurance giant's decision to initially "sit on the sidelines" in the huge Obamacare market in California has led to some negative consequences for the company.

California's Obamacare exchange on Thursday refused to approve UnitedHealth Group's request to sell Obamacare plans throughout the Golden State next year—instead limiting the largest U.S. insurer to just five regions in the state that have few health plans currently on sale, The Los Angeles Times reported.

Peter Lee, executive director of the Covered California exchange, pointedly said that UnitedHealth and other insurers that previously sold individual plans in the state, but which sat out the launch of Obamacare there in 2013, "should have a higher bar" to selling plans on the exchange, the Times reported.

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Such plans that left the individual health insurance market normally would have to sit out that business for five years.

"We think the health plans that helped make California a national model should not be in essence undercut by plans that sat on the sidelines," Lee reportedly said.

But Covered California on Thursday agreed to allowed UnitedHealth to partially resume business in the five regions where people have fewer than three insurance plans to choose from. The Times noted that most of those areas are rural counties in Northern California.

The decision means that UnitedHealth will not be able to sell throughout all of California until 2017. The state is one of the jewels of Obamacare, with its 1.2 million exchange customers last year being the highest individual state tally by far in the nation.

Homepage of Covered California
Source: Covered California
Homepage of Covered California

State Insurance Commissioner Dave Jones disagreed with limiting the entrants of insurers onto the exchange, saying it "protects the big health insurers' market share and hurts consumers by denying them additional choices," the Times reported.

The newspaper noted that the four biggest insurers already doing business on Covered California accounted for 94 percent of enrollment statewide last year. Those issuers are Anthem Blue Cross, Blue Shield of California, Health Net and Kaiser Permanente

UnitedHealth had originally been hesitant about participating in Obamacare exchanges. But it now sells health plans on exchanges serving a total of 23 states.

A report Thursday from Capital Public Radio noted how limited insurance offerings can be in some sections of California.

"In 22 counties in Northern California there are ZIP codes where there is only one choice of insurer," according to the online story about that report. "There are areas around Monterey and Santa Cruz on California's Central Coast that also only have one carrier."

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The report noted that Covered California Chief Lee last July had said "in every corner of the state, consumers will have at least two plans to choose from, and in most areas, where most of the Californians live, they can choose from between five or six plans."

Read the full Los Angeles Times story here.

Read the full Capital Public Radio story here.