Aetna (AET) on Tuesday said it meant to abandon its 2017 expansion plans on the Affordable Care Act exchanges and was reviewing future participation in the marketplaces, even as the health insurance giant reported second-quarter results that beat estimates.
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Aetna said its exchange-based plans for individuals had a pretax operating loss of $200 million in the second quarter, and it projected the loss from that business would exceed $300 million by year-end.
Sarah Kliff, senior editor covering healthcare for Vox.
From July 2015, when it announced its intention to buy Cigna, until last month, Anthem gave 4 million documents and at least three terabytes of data to the government, and produced 22 witnesses for deposition, the company said.
“It these mergers were to take place, the competition among these insurers that has pushed them to provide lower premiums, higher-quality care, and better benefits would be eliminated”, Attorney General Loretta Lynch said during a press conference announcing the lawsuit.
The company, however, reported higher-than-expected quarterly revenue and profit on Tuesday as memberships grew in its government business, under which it sells Medicare and Medicaid plans.
Mark Bertolini, chief executive of Aetna Inc., has told investor analysts that the health insurer is developing an alternative plan in case its pending $37 billion acquisition of Humana Inc. collapses.
Aetna’s announcement comes two weeks after the Department of Justice blocked its merger plans with Humana (HUM), as well as Anthem’s purchase of Cigna (CI).
In addition, Aetna and Humana Inc.
The decision by Aetna comes less than 4 months after the nation’s largest insurer, United Healthcare, chose to roll back nearly all of its Obamacare offerings after sustaining losses and after the Department of Justice denied Aetna’s proposed merger with fellow-insurer Humana. Part of the problem has come from insurers finding that enrollees were running up medical costs greater than they expected when the companies set their premiums, he said, but also “there have been structural issues, there have been rule changes” by regulators that have made the business far harder to gauge.
Eight states and the District of Columbia joined the Justice Department’s challenge to Aetna’s deal with Humana.
The company also announced that it is cancelling plans to expand its Obamacare offerings to five new states, and it will reassess its existing business in the 15 states it already covers.
Some 11.1 million people are enrolled in Obamacare this year, according to the latest federal statistics.
The companies on Monday said they would sell the Medicare Advantage plans for 290,000 members across 21 states to Molina Healthcare in a deal worth a combined $117 million.
Aetna’s second-quarter earnings per share rose 8% to $2.21, topping views for $2.12.
Excluding special items, Aetna earned $2.21 per share, exceeding the analysts’ average estimate of $2.12, according to Thomson Reuters I/B/E/S.
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Aetna’s shares ended the day up 1 percent, to $116.90.
