Aetna continues to pursue a merger with Humana, even though the federal government moved in July to block the $37 billion deal on antitrust grounds.
Advertisement
Aetna said this week that it was curtailing its presence on the Obamacare exchanges to stem mounting financial losses. Prominent Republicans, including Donald Trump’s campaign, said the move, which came after similar ones by other major insurers, reflected flaws of the ACA.
In June, ongoing dialogue between Aetna and the department about the exchanges turned to discussions about the potential impact of a failed deal on those markets, according to a person familiar with the situation. “[.] if the Justice Department were to block the merger, Bertolini warned, Aetna could no longer sustain the losses from its exchange business, forcing it to sharply change direction”. The department had asked Aetna how, if at all, a decision on the proposed merger would affect Aetna’s willingness to offer insurance through the exchanges.
“Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have chose to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward”, Mark T. Bertolini, Aetna’s chairman and CEO, said in a Monday announcement.
The company said pulling out of the exchange is a financial decision.
One in five manufacturers in NY said they were reducing the number of their employees due to Obamacare, according to a survey from the Federal Reserve Bank of NY. Health insurance analysts say three insurers are needed for a healthy competitive market.
A Justice Department spokesman declined to comment.
Q: How many people will be affected by Aetna and other insurers dropping or reducing Obamacare insurance?
Aetna had filed and received state approval to sell plans for 2017 in Boone, Campbell, Kenton, Fayette, Madison, Jefferson, Oldham, Trimble, Henry and Owen counties.
“If the Humana transaction is eventually blocked, which we don’t believe it will be, the underlying logic of our written response to DOJ would still apply with regard to the public exchanges where we will participate in 2017”, said the representative.
And while the company may be shutting down this line of business in SC and in other states for other specific reasons, experts say it’s clear insurance companies are losing money on the Affordable Care Act.
Advertisement
Aetna reports losing $430,000,000 in its individual health care policies since the exchanges opened in January of 2014. The letter the reporters obtained, from Aetna Mark T. Bertolini Chairman and CEO, states, “if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint”.
