Aetna Leaving Markets

[Ann H]

Aetna latest insurer to question Obamacare's future - Aug. 2, 2016

Aetna is reconsidering its participation in Obamacare, making it the latest large insurer to cast doubts on the future of the individual exchanges.
Aetna (AET) said Tuesday it is canceling plans to expand into more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges. It expects to lose $300 million (pre-tax) on its Obamacare business this year.

"...in light of updated 2016 projections for our individual products and the significant structural challenges facing the public exchanges, we intend to withdraw all of our 2017 public exchange expansion plans, and are undertaking a complete evaluation of future participation in our current 15-state footprint," said CEO Mark Bertolini in a second-quarter earnings statement.

A growing number of insurers on the Obamacare exchanges are voicing concerns about the viability of the program as they run up big losses. Many say that their premiums were too low and didn't cover the cost of care because their consumers are far sicker than anticipated.
Some 11.1 million people are enrolled in Obamacare this year, according to the latest federal statistics.

UnitedHealthcare (UNH), the nation's largest insurer, is exiting most Obamacare exchanges in 2017. Others, including several Blue Cross Blue Shield companies, are also scaling back. And more than half of the co-op insurers, created and funded by the health reform law, have failed.
To cover these sicker patients, many insurers are requesting big premium hikes for 2017, some in the high double digit percentages.

Insurers are requesting premium increases of 9%, on average, for the benchmark silver plan -- upon which federal subsidies are based -- in major cities in 16 states plus the District of Columbia, according to the latest review by the Kaiser Family Foundation. But this masks substantial variation, with requests ranging from a drop of 13% to an increase of 25%. States still have to review the requests and could change them.​

 

[Yagents]

The building is burning and the exit sign is still visible.

 

[Ann H]

For Phoenix, we only have Aetna HMO and Cigna (staff-model clinics HMO) for 2017. Well, there is Phoenix Health Plans with its high prices and super-small network. If Aetna pulls out, I expect Phoenix Health Plans to follow, and maybe even Cigna. If that happens the city of Phoenix would be without an IFP plan ON or OFF Exchange. I hope this doesn't happen.

 

[HoosierLife]

It's almost like Obamacare wouldn't implode/explode until after the 2016 elections.

 

[saintstigers]

I guess Aetna's threatening to leave due to the DOJ blocking their merger

 

[FLM2]

This is obviously a political ploy regarding the merger issues but it will be interesting to see how it pans out.

Unfortunately I could see a scenario where they stay in their current footprint but eliminate agent compensation as a way to limit enrollments, if that is the case I wonder what they will do about renewals for 2017.

 

[scagnt83]

It might be partly political, but a $300mm loss is not something any public company is able to take lightly. They have a legal responsibility to shareholders to invest their money in a prudent fashion. This would have happened eventually either way. They might have planned to wait until 2017 to pull out because of the merger and now have reassessed that. But the ball was rolling on this before the merger issue.

 

[Ann H]

It might be partly political, but a $300mm loss is not something any public company is able to take lightly. They have a legal responsibility to shareholders to invest their money in a prudent fashion. This would have happened eventually either way. They might have planned to wait until 2017 to pull out because of the merger and now have reassessed that. But the ball was rolling on this before the merger issue.

My thoughts exactly, scagnt83.
1. Inevitable anyway
2. $300M loss is big
3. Merger may not happen anyway
4. Exit sign is blinking

 

[AllenChicago]

I wonder if the "reconsideration" of Aetna's current 15 state footprint also includes their off-exchange plans? I don't know how they get away with running a two-track portfolio, but Aetna's off-exchange plans in Illinois are really good.
ac

 

[Yagents]

They opened the door to leave:

3 ways Aetna shook the ACA

Additionally, given the deadline to attest to our final rate filings for 2017, we are also undertaking a complete evaluation of our current exchange footprint, as the poor performance of these products warrants such an analysis."

Interesting development:

The level of anger between insurers and drug companies could increase.

Bertolini said one reason ACA individual claims appear to be so high is that drug companies and other parties with a business interest in coverage expansion seem to be making a special effort to get very-high-cost individuals covered.

"We now believe we have third parties paying premiums for special interest groups, both in small group and individual, that are supporting people getting access to these services," Bertolini said. "And because of that, we have, while we have the same demographic mix in this population, we have a much higher intensity and morbidity in that population."

Ordinary people may think the product and care providers are simply helping sick people get care. Insurers see that kind of activity as a move to game the system and increase the morbidity of the risk pool in a way that threatens their ability to price coverage.