Unicare, a health insurance company owned by Wellpoint, Inc., the largest health insurer in the US, has announced that it is exiting the health insurance market in Texas and Illinois by the end of the year. Unicare's 400,000 members in Texas and 180,000 members in Illinois will have to find coverage elsewhere.

It seems strange, what with health insurance reform legislation promising to add many new government subsidized customers to the health insurers' rolls, but Unicare admits that they can't cut it against big names like Blue Cross Blue Shield and United Healthcare in the Texas and Illinois markets. The brand was created in the early 90's by parent company, Wellpoint, in order to sell health insurance products outside of California. They expanded quickly, particularly in Texas, by offering low-rate, bare bones health plans. That strategy ultimately failed when competitors matched and bettered their offerings and could negotiate lower rates from providers due to their larger membership.

So are Unicare's customers hung out to dry as far as finding new coverage? Fortunately not. Unicare has collaborated with Hallmark Services Corp. to provide a soft landing for its customers in the form of a transition to Hallmark's Blue Cross Blue Shield plans in both Illinois and Texas. Unicare says its members will be offered BCBS plans of comparable benefits and at similar rates.

What about Unicare members who are no longer insurable because of pre-existing conditions? Thankfully, BCBS will guarantee acceptance of coverage for Unicare members who opt for the unique deal. Unicare members will transition without a break in coverage and without requiring proof of insurability, no questions asked. Offers and acceptance forms are in the mail. Please note, the deadline for acceptance of the guaranteed acceptance deal is December 1, 2009.

What are the options for those Unicare members who do not want the Hallmark BCBS offer? Unicare will stop offering health coverage in Illinois and Texas on January 1, 2010. Members who do not transition to BCBS will be allowed to continue coverage with Unicare until June 1, 2010. Unicare members are, of course, free to shop for replacement coverage with any other health insurance company if they are willing to go through the standard requirement of answering health questions to qualify for coverage.

What about ObamaCare health care reform legislation going on in Congress? Whatever the details of the final bill that becomes law, health insurance reform provisions - like eliminating pre-existing condition underwriting - will not take effect for 3 years, January 1, 2013. So we have to continue to play the game under the current rules until then.