Aetna follows UnitedHealth Group Inc., which said in April that it planned to largely exit the Obamacare individual insurance market in 2017. So it appears these fleeing insurers are making once dubious claims that the ACA will lead to higher health care costs look prophetic. Through our locally operated health plans in 12 states across the nation and in the Commonwealth of Puerto Rico, Molina now serves approximately 4.3 million members.
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Analysts said the results were in-line with a pre-announcement that Humana made late last month, when it raised its earnings guidance for the year, pointed to improvements in its main Medicare Advantage business and warned of growing losses from ACA plans.
Aetna said it would be analyzing the plans it now sells in 15 states, including Texas, and would be canceling a planned expansion.
Humana set aside about $208 million more in the second quarter to cover losses in the business, which it now operates in 15 US states.
Humana shares have decreased 5 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed 5.5 percent.
Sarah Kliff of Vox speaks with Here & Now’s Jeremy Hobson about what Aetna’s announcement reveals about the future of USA health law. But now, the company will need to rethink its current strategy, Aetna’s Chief Executive Officer Mark T. Bertolini said in a statement.
Anthem CEO Joseph Swedish last week reaffirmed the company’s commitment to continue selling coverage on Obamacare’s exchanges, even though the company is projected to lose money on that portion of its business this year. The sign-up period for 2017 coverage begins on November 1.
Aetna has reconsidered the choice of participating in Obamacare, the latest large insurer to cast dispersions of the future of individual exchanges.
Molina Healthcare is expected to gain about 290,000 Medicare Advantage members in 21 states, which preserves “robust competition for seniors choosing to receive Medicare coverage through Medicare Advantage plans” if the deal is approved. Molina Healthcare Inc. will pay about $117 million in cash for the assets, and the transactions are subject to the successful completion of Aetna’s acquisition of Humana, as well as other regulatory approvals.
Part of the issue is that these exchanges are still new and the majority of insurers have yet to figure out how to make them profitable. Risk adjustment, a mechanism that transfers funds from insurers with healthier clients to those with sick ones, “doesn’t work”, he said. Insurers have been seeing growing medical costs among the ACA-plan enrollees.
The fate of the market may ultimately rest on the November election.
The Department of Health and Human Services said insurers are adapting to the new individual marketplace at different rates.
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“What they’re saying is they would have more financial stability if they had a larger market share with Cigna, and Cigna would bring them the large employer market that could help them offset some of these losses”, she said.
