In 2017, another of the health insurance industry’s big five insurers, Aetna Inc., will exit markets in the majority of states in which it had been participating, reports Bloomberg. The company will continue to sell exchange plans in only four states: Iowa, Delaware, Nebraska, and Virginia. They will pull out of the remaining 11, which include North Carolina, Florida, and Pennsylvania. In the states where Aetna is exiting from exchanges, they will continue to offer plans outside those markets. The announcement is just the latest in a series of blows to Obamacare, including struggling health co-ops and rising premiums.
In total, Aetna, which covers around 838,000 people through the ACA exchanges, is withdrawing from 70% of the counties in which it offers insurance, according to Business Insider. The decision will affect approximately 80% of the company’s customers currently enrolled in individual ACA plans, who will be forced to find a new insurer next year. Some may only have one insurer to choose from when they buy coverage for 2017 (at least one county in Arizona will no longer have an ACA provider, explains the Atlantic).
Aetna joins Humana and UnitedHealth in withdrawing a significant number of its offerings through Obamacare, marking a “huge blow to the future of the act.”
“Back when UnitedHealth was the only insurance company bailing out, it was easy to dismiss as just one company trying to boost its bottom line,” Max Nisen wrote for Bloomberg, “But when all five big insurers are bleeding money, it's clear you've got bigger problems.”
A Political Move?
The company was driven to the decision after posting a 2016 second quarter loss of $200 million, though some argue that the move was a political one. Massachusetts Senator Elizabeth Warren intimated that Aetna was withdrawing in response to the Justice Department’s efforts to block its merger with Humana. Indeed, a July letter from Aetna CEO Mark Bertolini to the DOJ specifically addressed the merger and its consequences — both if it were allowed to proceed, and if the DOJ moved to stop it (which it ultimately did).
"Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses,” Bertolini wrote. “Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.” Aetna has since released a statement saying the decision was a result of the “full visibility” the company gained into its “second quarter individual public exchange results, which…showed a significant deterioration.”
Ane Gupte, analyst at Leerink Partners, estimates that Aetna’s exit will boost its earnings next year by about $200 million.
What It Means
If Aetna withdrawals completely from the exchanges, this could spell disaster for the ACA, though Kevin Counihan, CEO of healthcare.gov, insists the markets are in no real danger and will continue to serve those in need. The ACA has been particularly effective for those living below the poverty line, and the program has delivered insurance to some 20 million Americans.
“Aetna’s decision to alter its marketplace participation does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year,” Counihan told Bloomberg.