Aetna, the third-largest health insurer in the US, said Tuesday that it was reconsidering its offerings on the state exchanges that make up the backbone of the Affordable Care Act, the healthcare law more commonly known as Obamacare.
Here's a quick rundown of the announcement:
- Aetna will not expand its Obamacare offerings into the New Jersey and Indiana state exchanges in 2017, as it originally planned.
- Aetna's CEO also said the company was "undertaking a complete evaluation" of the Obamacare business.
- On its conference call, the company said it expected an annual loss on its ACA business "in excess of $300 million."
- The move comes after the US's largest health insurer, United Healthcare, said in April that it was abandoning the exchanges almost completely.
- The Department of Health and Human Services responded saying insurers are "adapting to these changes" of the ACA at different paces and the state exchanges are still sustainable.
In a conference call following the company's earnings announcement, CEO Mark Bertolini said the firm had halted its plans to expand into New Jersey and Indiana in 2017 and was looking into the reasons for losses in the exchanges it was already participating in.
Here's Bertolini (emphasis ours):
"In light of the disappointing year to date performance and updated 2016 projections for our individual on and off exchange products, combined with the significant structural challenges facing the public exchanges, we believe it is only prudent to reassess our level of participation on the public exchanges. Our initial action will be to withdraw our 2017 public exchange expansion plans. Additionally, given the deadline to attest to our final rate filings for 2017, we are also undertaking a complete evaluation of our current exchange footprint as the poor performance of these products warrants such an analysis."
Aetna operates in 15 states. Its decision to limit its expansion comes less than four months after the nation's largest insurer, United Healthcare, decided to roll back almost all of its Obamacare offerings after sustaining losses and after the Department of Justice denied Aetna's proposed merger with the insurer Humana.
The move could also be worrying for consumers, since the number of insurers offering plans in a state is tightly correlated to the price of insurance.
UPDATE: Following Aetna's earnings call, the US Department of Health and Human Services (which oversees the implementation of the Affordable Care Act) provided a statement to Business Insider saying that it has the "full confidence" that the exchanges will be sustainable in the future and that insurers are simply "adapting to these changes at different rates."
Here is the full statement from HHS Press Secretary Marjorie Connolly:
"We 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. In its first year, the ACA nearly doubled the size of the individual market, and the Marketplace has continued to grow since then, creating major business opportunities for insurers who serve this market well. At the same time, the ACA changed the nature of insurance market competition, from avoiding people with pre-existing conditions to competing on cost and quality. It’s no surprise that insurers are adapting to these changes at different rates. But with issuers across the Marketplace introducing new provider contracts, care management approaches, and other innovative strategies, and with the help of Administration actions that will strengthen the Marketplace and broaden the risk pool, consumers coming back to shop for 2017 will continue to have a robust set of choices. And over the long run, it’s consumers’ choices that will drive which insurers succeed in the Marketplace and benefit from the growth opportunities it continues to create."
