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Aetna to trim HMO offerings across the country

Aetna U.S. Healthcare is continuing to reduce its presence in the health insurance market by pulling HMOs off the shelf in all or parts of nine states.

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Starting April 1, 2002, Aetna will withdraw from the New Hampshire health maintenance organization (HMO) market leaving 20,000 scrambling for coverage.

"We plan to focus on markets where we can be more effective and successful."

The health insurer is also withdrawing entirely from the HMO markets in Louisiana, Rhode Island, and South Carolina, and will no longer offer HMOs in certain areas of California, Georgia, Indiana, Missouri, and Pennsylvania.

According to the New Hampshire Insurance Department (NHID), Aetna plans to be entirely out of the large group health HMOs by April 1, 2001, and to have its withdrawal from the small group HMO market completed in six months.

The NHID says that Aetna's move in that state is a result of the insurer's relatively small market share. This has made the insurer unable to negotiate competitive contracts with health care providers that, in turn, has led to Aetna losing money on New Hampshire HMOs since 1996.

The HMO pullout is part of Aetna's ongoing national strategy of withdrawing HMOs from markets where the insurer is not competitive in order to strengthen the company's overall financial picture.

"We still plan to be a strong player in the fully funded HMO market," says Walt Cherniak, a spokesperson for Aetna. "But we plan to focus on markets where we can be more effective and successful."

Aetna will continue to offer preferred provider organizations (PPOs) and indemnity products in many of the areas where it will no longer offer HMOs, says Cherniak. Employers abandoned by Aetna's withdrawal from the HMO market will have the option to switch to Aetna PPOs or seek insurance with another company.

"This is something we've been doing on an ongoing basis for some time," says Cherniak.

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