Aetna Inc. reported second-quarter profit of that beat Wall Street estimates as the insurer announced it will withdraw all expansion plans this year in Affordable Care Act exchanges and is considering future participation in its current 15-state footprint.
Advertisement
A departure by Aetna, the nations’ third-largest insurer, could further reduce the number of choices for customers and eventually push insurance prices higher.
However, Aetna’s CEO Mark Bertolini doesn’t seem as keen on the insurer’s ACA exchange strategy, an area Aetna previously and repeatedly stated it would continue operations.
Even so, Aetna reported a $200 million pretax operating loss in its public exchange business, as sicker-than-average exchange enrollees choked the health insurer’s profit.
The exchanges have helped millions of people gain health coverage, many with assistance from income-based tax credits.
One of the country’s largest insurance companies is now expected to lose money this year after emerging as one of the few insurers that made money on Obamacare’s exchange business early on. That’s a marked change from a few months ago, when Bertolini said he expected the company to break even on its ACA business.
Gary Claxton, director of the Henry J. Kaiser Family Foundation’s Health Care Marketplace Project, said the federal government was working on changes aimed at attracting more insurers, including altering a risk-adjustment program.
“We’ve got to be able to cover the costs associated with providing the care”, Bertolini said in an interview.
Marjorie Connolly, press secretary at the Department of Health and Human Services, said in a statement that officials “have full confidence, backed by data, that the Health Insurance Marketplace will continue to thrive for years ahead as a place where insurers compete for business and consumers have access to a range of affordable coverage options”.
Aetna’s second-quarter earnings per share rose 8% to $2.21, topping views for $2.12.
Earnings, adjusted for one-time gains and costs, amounted to $2.21 per share.
Aetna also posted better-than-expected operating revenue of about $15.9 billion in the period.
Aug 2 Aetna Inc said it meant to withdraw plans to expand its Obamacare business next year, and the USA health insurer announced the sale of some Medicare Advantage assets to get antitrust nod for its takeover of Humana Inc. Molina’s purchase is contingent on the resolution of the Justice Department’s lawsuit to block Aetna’s combination with Humana. 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.
The Medicare Advantage plans in the transactions span the states of Alabama, Arkansas, Florida, Georgia, Illinois, Louisiana, North Carolina, Nevada, Ohio, Oklahoma, Texas, Virginia and West Virginia and certain Humana plans in Delaware, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, Pennsylvania, South Dakota and Utah.
Advertisement
Aetna’s announcement comes almost two weeks after federal regulators said they were suing to stop the insurer’s $34-billion acquisition of Humana, which provides Medicare Advantage coverage, a privately run version of the government’s Medicare program for the elderly.
