By Anna Wilde Mathews
Aetna Inc. became the last of the five major national health
insurers to project a loss on Affordable Care Act plans for 2016,
underscoring concerns about the stability of the insurance
marketplaces at the heart of the Obama administration's signature
health law.
Aetna said it would re-evaluate its participation in the 15
state exchanges where it currently sells plans, and cancel a
planned expansion into more.
The moves come in the wake of recent confirmations by
UnitedHealth Group Inc. and Humana Inc. that they would pull back
sharply from the ACA's exchanges amid deepening losses, and a
disclosure by Anthem Inc. that it now expects losses on its ACA
business in 2016.
"We will look at the financial performance of the business over
time, its trajectory and volatility" and the review will be
market-by-market, said Aetna Chief Executive Mark T. Bertolini.
Aetna's options in each county would include sharply limiting
the plans it offers there, completely exiting, or remaining fully
engaged, he said. Aetna will need to begin making initial decisions
by next week because of regulatory deadlines, he said.
Aetna had earlier made regulatory filings indicating it was
considering expanding into five new state exchanges in 2017. In at
least one of those states, Oklahoma, Aetna's decision not to come
in, along with the earlier announced pullout of UnitedHealth, means
there will be just one exchange insurer statewide next year, a
spokeswoman for the state insurance regulator said. Other states,
such as Alaska and Alabama, were already expected to move to having
just one marketplace insurer next year.
The dynamic is worrisome for some state regulators. "As a
general rule, more companies, and more competition, is better,"
said Mark Fowler, chief of staff at the Alabama Department of
Insurance. Humana and UnitedHealth will no longer sell exchange
plans in the state next year, leaving only Blue Cross and Blue
Shield of Alabama.
Obama administration officials said the exchanges are generally
thriving, amid ongoing regulatory moves to strengthen them. "The
marketplace continues to grow, and there are companies making
money," said Kevin Griffis, Assistant Secretary for Public Affairs
at the Department of Health and Human Services.
Concerns about limited insurance options in rural regions
predate the ACA, he said, and federal officials "continue to every
day evaluate how we can help the marketplace work better for
consumers."
In a recent article in JAMA, the journal of the American Medical
Association, President Barack Obama flagged concerns about
insurance options and urged the creation of a public plan "to
compete alongside private insurers in areas of the country where
competition is limited."
Aetna currently has about 1.1 million individual ACA plan
enrollees, roughly 838,000 of whom purchased their coverage on one
of the health law's exchanges.
Aetna said Tuesday it expected a loss of more than $300 million
for the year on its ACA plans amid mounting medical costs among
enrollees. The insurer lost about $200 million in the second
quarter on the plans. In April, Aetna had said it was aiming to
roughly break even on its exchange business this year and move
toward profitability in 2017. Then, Mr. Bertolini called its
position in the ACA marketplaces a "good investment."
Despite the exchange results, Aetna posted better-than-expected
profit and revenue growth overall in the second quarter and
reaffirmed its 2016 operating earnings guidance.
Aetna's darkening perspective on the ACA business echoes
comments by Anthem, which last week went from projecting a slight
profit this year to expecting a mid-single-digit percentage loss on
ACA plans. Both Aetna and Anthem last month drew antitrust suits
from the Justice Department seeking to block major acquisitions --
Aetna's planned merger with Humana, and Anthem's deal for Cigna
Corp. Anthem said that if it is able to complete its Cigna deal, it
might go into nine new exchange states.
The rapid shifts in outlook, along with the withdrawals, are
signs of continued upheaval in the ACA marketplaces in their third
year, analysts said. "This market is very volatile," said Deep
Banerjee, an analyst with S&P Global Ratings.
Not all insurers are retrenching. Cigna, though it said it
expected a loss this year on its exchange business, still plans to
expand into a few new markets. Cigna, by revenue the smallest of
the five national insurers after UnitedHealth, Anthem, Aetna and
Humana, has a limited ACA presence and enrollment, however.
In addition, a number of Medicaid-focused insurers continue to
do well. Molina Healthcare Inc., for instance, is making a profit
on its exchange business and plans to extend its offerings to 137
counties in 2017, from 118 this year.
The Medicaid insurers may have several advantages over companies
grounded in traditional commercial coverage, said Jim O'Connor, a
principal at consultants Milliman Inc. Their plan designs often
include lower-cost and more limited networks of health-care
providers, as well as managed-care features like requirements that
consumers get referrals to see specialist physicians, he said.
Their clientele, which is often relatively low-income, may be
younger and tend to have lower health costs than other exchange
enrollees, he said.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
August 02, 2016 19:52 ET (23:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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