The five largest publicly traded insurers by market value all have reported losses in their public exchange businesses. It follows in the footsteps of UnitedHealth Group and Humana, which also announced plans to cut back their participation in the exchanges.
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“It is effectively pulling out of almost 70 percent of the counties where it offers health plans through Affordable Care Act exchanges”. The company said it lost $200 million in pretax income from the exchange business in the second quarter and expects to lose more than $300 million this year.
Arizona is just one of the 11 states Aetna will no longer cover through Obamacare; the company’s subsidized plans will now only be available in four states. It announced the intention to continue its participation in the individual public exchanges and gain more insights from counties, where its presence will be maintained. If state officials cant encourage any insurers to stay, some counties could find themselves with no exchange plan coverage in 2017.
Aetna Chief Executive Officer Mark Bertolini said in a letter to the Department of Justice during a review of the company’s deal to purchase its rival, Humana, that if the DOJ challenged the merger, then Aetna would pull out of most of the government-run state insurance exchanges, according to Reuters.
“Aetna’s withdrawal from almost a dozen exchanges is another sign that Obamacare is unsustainable”, FreedomWorks CEO Adam Brandon said.”Premiums are rising as a result of diminished competition and unbalanced risk pools that have led to a higher than expected utilization of health care”.
The Hartford-based health insurer said it will reduce its participation in health care exchanges next year to 242 counties from 778. But it also scaled back quickly and only plans to offer policies in three states next year, Nevada, Virginia and NY.
Aetna has said it has been swamped with higher than expected costs, particularly from pricey specialty drugs. It also said of its wish to expand its footprint in future on the condition of exchange linked policy improvements. The Health Care segment’s services and products consist of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an insured basis and an employer-funded, or administrative services contact, basis and emerging businesses services and products, such as accountable care solutions. States it is exiting include Florida and Ohio.
Anthem, which sells coverage on 14 state-based exchanges, surprised analysts last month when they said they were preparing for a loss on that part of the business this year.
The rural markets can be less attractive to insurers because there are fewer customers over which an insurer can spread costs, and hospitals and other health care providers can build dominating market positions, making them formidable negotiating foes over rates.
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But even Molina has scaled back its growth plans. The nation’s largest insurer UnitedHealth (NYSE:UNH) also said publicly it has made a decision to leave the major exchanges nationwide, raising doubts about the financial and political stability of the president’s signature and unpopular health care law. The government is hoping that when uninsured consumers face the full penalty, they will change their minds and sign up.
