John Alden Pulling Plug on Small Health Plans in State

John Alden Financial Corp., a major insurer, has told California officials that it plans to stop selling health plans to small businesses in the state.

The Miami-based insurance giant notified regulators of its withdrawal in a letter Jan. 23, a spokeswoman for the Department of Insurance said Tuesday. An executive at the company’s California headquarters in Irvine refused to comment.

Earlier last month, Alden announced plans to reduce its presence or completely withdraw from certain states where pressures from managed care and changing regulation have increased the costs of doing business in the small-group market. At the time, the company didn’t specify the states.

California insurance experts, however, said Tuesday that both market and regulatory factors in the state have made it harder for Alden and others that cater to small businesses to make money.

Other insurers also have stopped writing similar policies in the state in the wake of legislation in the early 1990s restricting rate increases on small plans, according to the insurance department spokeswoman. Legislation also required insurers to issue policies to cover even terminal cases, but limited rates on those policies.