Aetna Also Dropping Out of Some Markets
Consumers who buy health insurance through the Obamacare marketplaces will face an even greater shortage in the number of plans available for 2017. Aetna, the country’s third-largest health insurer, announced on Monday that it would be withdrawing individual major medical plans from the exchanges in 11 out of the 15 states where it currently does business. Only plans in Delaware, Nebraska, Iowa and Virginia will remain.
Aetna will continue to offer off-marketplace coverage, but it will cut ties with more than 500 counties in the United States. Right now, Aetna offers marketplace coverage to 778 counties. That number will drop to 242 for next year.
This announcement follows an earlier announcement from the company that it would not be expanding its 2017 plan options – a decision that contradicts Aetna’s position from the beginning of the year. Then, the company claimed that it was too early to bow out of the ACA exchanges and that it was hopeful for better opportunities in the future. Citing financial losses, Aetna now joins United Healthcare and Humana among insurers who are pulling out of the marketplaces for next year.
Aetna has reported a total loss of $430 million since January 2014, shortly after the Obamacare exchange sites opened for business. At the end of the second quarter this year, the company lost $200 million. Aetna has been attempting to merge with Humana, another major player in the individual health insurance market, in a deal worth $34 billion. That effort was blocked last month by the Department of Justice.
Aetna’s withdrawal does not bode well for the Obama administration and proponents of the Affordable Care Act. While coverage will still be widely available on the ACA exchanges, many consumers will continue to face more limited options, especially in terms of network providers. Blue Cross Blue Shield, which holds the largest presence on the exchanges nationwide, has also considered pulling out.
Financial issues are the motivating factor behind insurer participation. Health insurance companies have been counting on a larger number of healthy people to enroll in Obamacare plans, but that hasn’t happened yet. Healthier enrollees offset the higher cost of care needed for sicker beneficiaries. The untested risk pool has been difficult for insurers to assess, resulting in substantial profit losses. Companies like United Healthcare, Humana and now Aetna are scaling back participation to recoup these losses.
Leaders from Aetna have said that changes need to happen in order for insurers to remain in the Obamacare exchanges. Offering high-quality health insurance to people based on the existing risk pool is not financially viable in the long run.
Already, insurers who are staying in the marketplaces have submitted premium rate increases to state insurance departments. Premium rates are expected to skyrocket for next year due to financial losses. It remains to be seen how Aetna’s withdrawal along with other withdrawals from major insurers affect competition during the 2017 enrollment period, which starts Nov. 1.