In addition to Florida, Aetna recently started selling individual health-insurance policies in Arizona, California, Georgia, Illinois, Maryland, and Texas.

OIR Welcomes Aetna with Open Arms

Aetna enters a market dominated by Blue Cross and Blue Shield of Florida, Humana, and a host of out-of-state insurers. No one was happier to welcome Aetna into Florida than the state's Office of Insurance Regulation. Not only does Aetna add more competition into the market, but it also comes into the market as an in-state carrier, which places it under Florida consumer protection laws.

“Out-of-state association groups are primarily governed by rules of another state and frequently allow rating practices that would be prohibited in Florida,” said Insurance Commissioner Kevin McCarty. Like many states, Florida has its troubles policing out-of-state insurers, who often raise rates by exorbitant amounts on short notice or are tied to scams.

Aetna indicated that it came into the state as a regulated plan because of the added credibility that it will gain in the marketplace, in particular to compete against Blue Cross. Aetna for years has been one of the largest group health insurers in Florida.

Medical, Dental Programs Available

Aetna is offering individuals and their families several standard HMO and PPO-type plans. Plans will provide coverage for routine checkups, preventive care, specialty care, hospitalization and surgery, diagnostic testing, and emergency care. Some plans will also cover prescription drugs.

Members also will be able to choose among several high-deductible plans connected to an HSA. In HSAs, policyholders accumulate tax-free funds to pay for most medical expenses. The contributions are tax deductible, and unused balances can be carried forward year to year. HSAs also are portable, a distinct advantage in today's mobile society.

Aetna also is offering members the option to join a dental plan. Additional benefits include discounts on vision services, fitness clubs, and nutritional supplements. About the only thing not covered by Aetna's new plans will be maternity coverage. “We are worried about self selection,” Brubaker said. “Our strategy is to have products and quality services at affordable prices. I think Aetna brings a strong brand name, large provider networks, and consumer web tools.”

While premiums will vary based on a consumer's age, sex, and health status, premiums will be as low as $50 a month for a male in his 20s. Policies will be medically underwritten and pre-existing conditions won't be covered for the first year. Aetna, which officially started selling its plans Dec. 15th, is marketing its new products through brokers and directly to consumers through direct mail, telemarketing, and the Internet.

Agents Laud Healthy Market, Variety of Plans

Insurance agents across the state said they welcomed the new carrier to the individual market that for years struggled with high prices, limited choice, and slumping demand. “We are very excited that Aetna will now be offering health insurance plans for individuals and their families in Florida,” said Wes Fischer, president of The Health Insurance Store, a Kissimmee-based independent agency specializing in health insurance and employee benefits programs. “A majority of our clients are familiar with Aetna, and we believe there will be strong consumer interest in these new individual plan options.”

Marc Fine, an independent agent in Davie, said the individual health-insurance market is healthy and Aetna's entry only strengthens it. “We have a lot of plans in the market and the plans are offering a lot of different products,” he said.

Small groups are finding they can save hundreds of dollars a month by switching from group policies and buying individual policies for their family, he said. The caveat is that they can't have any pre-existing conditions, which can mean higher rates. Fine said he sees many uninsured customers just looking for a catastrophic-type coverage to protect them against major hospital bills. Many people can get such plans for less than $100 a month, Fine said. “This is a great market, because prices are not as expensive as most people think. We have a lot of plans to choose from with all types of budgets,” Fine reported.

Karen Hovis, an insurance agent in Stuart, said if people can buy individual policies while they are healthy and stay with it, the premium is going to be affordable. Hovis said there are advantages to both in-state and out-of-state carriers. The out-of-state businesses may be able to offer lower premiums, but the in-state ones may provide protection against rates escalating quickly.

Whether Aetna will succeed will depend on how their prices match up with existing carriers, she said. “There is a demand for quality carriers, no doubt about it,” Hovis said.

Aetna's entry into the market comes almost two years after United HealthCare left. United had 8,000 policies in the state when it quit. It tried to convert most of the policies to its out-of-state company, Golden Rule Insurance Co. It is unclear how many made the switch, but today Golden Rule has about 27,000 policies in Florida, according to OIR data. That makes Golden Rule the second largest out-of-state carrier behind Time Insurance Co. (formerly known as Fortis). United paid $500 million for Golden Rule in 2003, even though the company was facing 15 investigations by insurance officials across the country for aggressive sales tactics and questionable marketing. In all, 13 out-of-state carriers write policies in Florida, along with six HMOs and two PPOs.

What, Me Worry?

Officials at Jacksonville-based Blue Cross and Blue Shield of Florida say its longevity in the regulated market will help it compete with any new entrants. Michael Guyette, the company's group vice president of sales, said he was not surprised to see Aetna enter the business. “The individual market is definitely growing,” he said. He cited the state's fast-growing population and companies dropping dependents off group-health policies for accelerating the trend to individual coverage.

“We are starting to see more individuals looking at HSAs and higher deductible plans, where the premiums are lower,” Guyette said. But he quickly added that most customers are still in the traditional PPO policies with $250 or $500 deductibles. According to Guyette, Blue Cross sells most of its policies through agents, but an increasing number are sold directly on the company's own web site. Following the pattern in the group market, rate increases with individual policies have moderated in the past few years but are still in the low double-digit range, he said.

Rates can also vary based on where in Florida the policy is sold. For example, Miami has one of the highest rates for individual health insurance in the country, according to a recent survey for eHealth Insurance Services. Miami's rates reflect the city's high medical costs, partly due to its huge supply of doctors and hospitals and a higher-than-average amount of medical billing fraud. n