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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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.
Some 11.1 million people are enrolled in Obamacare this year, according to the latest federal statistics.
“We’ve got to be able to cover the costs associated with providing the care”, Bertolini said.
And more than half of the co-op insurers, created and funded by the health reform law, have failed.
“We view this as an exceptional opportunity to significantly expand our health plan product portfolio in new and existing geographies, while maintaining our commitment to government-sponsored programs”, said J. Mario Molina M.D., president and chief executive officer of Molina Healthcare, Inc. The increase in operating earnings was primarily due to higher fees and other revenue in Aetna’s Health Care segment and lower general and administrative expenses, partially offset by lower underwriting margins in Aetna’s Health Care segment.
Excluding costs stemming from the merger with Aetna, among other items, quarterly earnings rose to $2.30 a share from $1.77 a year earlier, above the company’s estimate for $2.28 a share.
Sarah Kliff of Vox speaks with Here & Now’s Jeremy Hobson about what Aetna’s announcement reveals about the future of US health law. The release stresses how the health insurance merger would benefit seniors seeking more affordable care and describes how the Medicare market has “robust competition” at this point in time. The sign-up period for 2017 coverage begins on November 1.
Health insurer Anthem Inc, which is fighting the government to save its merger with rival Cigna Corp, asked a judge on Tuesday to decide on the deal by the end of the year and to split its case off from the government’s challenge of a second merger of insurance companies. Anthem said it expected improvement on its results next year, but also that it would re-examine its full-on commitment to the exchanges.
In order to preserve the merger, the health payer is looking to sell $117 million worth of assets to Molina Healthcare Inc. Risk adjustment, a mechanism that transfers funds from insurers with healthier clients to those with sick ones, “doesn’t work”, he said.
To conclude, Aetna’s exit along with UnitedHealth and Humana from Obamacare plans is likely to minimize the competition on individual exchanges and will overburden the Blue Cross Blue Shield insurers to offer the only ACA plans.
“Because the whole pool is so ill, there’s so much utilization”, Bertolini said in an interview. Right now, insurers “that are less worse off pay for those that are worse worse off”.
The fate of the market may ultimately rest on the November election.
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“Our acquisition of Cigna will help stabilize pricing in this volatile market, enabling Anthem to continue its commitment to the public exchanges”, Swedish said. “If the Congress does not roll up their sleeves and figure out how to improve this marketplace, it’s going to be hard to figure out how it’ll continue in the future”.
