Aetna’s AET, +3.90% statement could be a sign that big problems with business on government exchanges isn’t widespread across insurers.
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The announcement is the latest in a string of bad news for President Obama’s signature health law.
Mega insurers such as Anthem and Aetna tried to soothe investors after comments from rival UnitedHealth Group on Obamacare sparked a major drop in insurer stocks.
“We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this exchange market”, AHIP CEO Marilyn Tavenner said in an e-mailed statement.
Other insurers selling plans on the exchanges have posted losses too.
This news would be mostly unremarkable except for the fact that those state exchanges are part of Obamacare, and it doesn’t take much to get people hyperventilating about the imminent death of Obamacare and speculating about its ramifications for the 2016 presidential campaign.
In a sharp reversal of its previously optimistic projections, UnitedHealth suspended marketing of its Obamacare exchange plans for 2016 – which the company has already committed to offer – to limit its exposure to additional losses.
In response to the news, the insurers reaffirmed their commitment to Obamacare’s exchanges.
“I do think we can make inroads in this business in 2016”, Guertin said. With 29 million people still uninsured, getting more people to sign up is “the critical thing going forward”, says Sara Collins, vice president for health care coverage at the Commonwealth Fund. As more young people buy insurance “it should improve the risk pool”, she says. In CT, UnitedHealth sold only about 2 percent of the policies purchased on the state’s exchange this year.
Other insurers have been sounding alarms in their third-quarter earnings about their exchange businesses, illustrating that the health law has become a broader issue of the industry, WSJ said. For instance, he said, around a quarter of Molina’s exchange enrollees came in outside the annual open-enrollment period, but this group didn’t appear to be running up a notably higher health-costs tab than others. Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.
That said, strategic positioning is obviously far from the whole story, or even the majority of it. UnitedHealth really is losing money on these policies right now.
“We know a lot more today about this business”, he said, “pushing rate increases in the low teens” for exchange policies.
Premiums charged on the exchanges by insurers were initially set without real-world insight into how much healthcare Obamacare members would demand, and results at Aetna and Anthem could suggest that while those markets remain a drag on profitability, experience from participating more widely than UnitedHealth Group in the first open enrollment may have allowed it to price its products more appropriately than UnitedHealth Group this year. Unlike the commercial carriers, the Medicaid HMOs have said that they plan to grow their Obamacare footprints.
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Centene Corp. on Thursday reiterated its 2015 profit forecast and said its health insurance marketplace business “continues to perform in line with expectations”.
