“We continue to have serious concerns about the sustainability of the public exchanges”, Aetna Chief Executive Officer Mark Bertolini said on a call Monday while discussing the company’s fourth-quarter results.
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Earnings per share were $1.37, topping the $1.22 consensus forecast of financial analysts surveyed by S&P Capital IQ.
Bertolini has said the company expects growth opportunities in Medicare and Medicaid in 2016. But Aetna also has flagged challenges, including losing some business from large national employers that made a decision to offer workers plans from multiple insurers.
The insurer’s medical enrollment came in almost flat, compared to the final quarter of 2014, at about 23.5 million.
Aetna’s key medical-benefit ratio, which measures the amount of premiums used to pay patient medical costs, fell to 81.9% from 83%.
In addition, Aetna spent less on medical care than it did past year. The operating losses for the business narrowed to 3 to 4 percent from the mid-single digits earlier in the year.
Discussions with the Justice Department regarding divestitures have yet to begin, he said.
Guertin said Bertolini’s remarks were meant to underscore that, even though Aetna’s ACA business appears to be improving, the company still thinks there changes are needed in the ACA’s markets. “I would say we’re very much in the same place, which is that it’s premature to declare victory or defeat here”. Quarterly operating earnings increased 11% from the prior year, due to higher underwriting margins and higher fees and other revenue in Aetna’s Health Care segment, partially offset by an increase in general and administrative expenses. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of $1.20 per share.
As for the company’s 2016 outlook, several analysts said they thought the projection was conservative, with the company likely to do better. Consolidation in the health insurance industry peaked previous year, when Anthem agreed to buy Cigna Corp. for $48.4 billion in July.
In fact, Aetna said Monday it is “increasingly confident” it can improve its results from ObamaCare and the individual market in 2016. “We have obtained seven of the necessary state approvals, and we believe we remain on track to close the transaction in the second half of 2016”, said Bertolini.
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Anne Steele contributed to this article.
