Aetna is one of the largest insurance companies in the country, and they struck another blow to the sustainability of the ACA marketplace. They were also one of the most ardent supporters from within the insurance industry for health reform.
That was until the finances came in this year. In their 2nd quarter earnings report it was revealed that they had significant losses in their ACA block of business. They are currently operating in 15 states, however they will now be providing product in just four and leaving many counties without much choice coming into open enrollment.
In the report, CEO Mark Bertolini said “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.”
This damaging news for the Affordable Care Act comes on the heels of an incredibly high profile lawsuit involving the Department of Justice antitrust division and Aetna over their proposed merger with Humana. Some wonder if government blocking the deal affected the that they would be leaving the ACA marketplace in 70% of their existing business.
The reason this is happening is one of the design flaws in the ACA. Insurance companies were supposed to receive payments from the federal government for enrolless who were high cost individuals. Republicans argued this was a bailout of insurance companies. The reality is there are not enough young and healthy people purchasing policies through the exchanges because they are too expensive. This has lead to a death spiral leading to a tumultuous 2017 renewal.
Another factor affecting things is insurance companies are also going through new payment methodologies as a result of a shift to more value based reimbursement. This could have an impact as well.
One final observation worth noting is the fact Aetna has been in the news a bit lately. If you stay on top of the news you may have heard about a lawsuit affecting them from the federal government. The Department of Justice is suing them in federal court over their proposed takeover of rival Huana.
Why this is important
This is important for many reasons. The first is the fact that choice matters. Consumers across the country are going to have much less choice. What is terrible is states like Arizona will not have any ACA exchange options. This is exactly the opposite of what was supposed to happen.
There are also less insurers now through mergers and earlier this month it was announced that Aetna and Humana and Anthem’s multibillion-dollar health insurance take over of Cigna may be decided by the end of 2016 according to the federal judge overseeing the U.S. Justice Department’s challenges. The other was was assigned to a different judge.
If you are an employee, you could potentially be paying more out of pocket for coverage or see an increase in co-pays as a result of plan design changes from your employer.
The economy is not great for many American’s and the out of pocket associated with many plans are now continue to rise. Therefore, as a public service offering for the last four years, E.D. Bellis has been producing and sponsoring a weekly radio program that helps businesses and individuals like you understand the changes occurring in the healthcare and insurance industries. Find out how to prepare yourself for the challenging 2017 renewal season. Sign up for our 2017 renewal guide here to get a head start on a volatile year.