Trouble for Obamacare: Aetna reduces exchange presence
Citing a second-quarter profit loss of $200 million, Aetna, one of the country's largest health insurers, said in a statement Monday night that it will greatly diminish its participation in a major provision of Obamacare.
Aetna will pull back its participation in the health insurance exchanges from 778 to 242 counties for 2017, continuing to operate only in Delaware, Iowa, Nebraska and Virginia – down from 15 states this year. The exchanges, or marketplaces, allow Americans to buy tax-subsidized health insurance.
"As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision," Mark Bertolini, Aetna's chairman and CEO, said in a statement.
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While not a killing blow to Obamacare, the loss of Aetna is a major setback for the administration, which has seen other providers drop out amid similar concerns.
Americans who were enrolled in the Aetna plans and who can no longer receive it will need to find a new plan for next year, and some will need to find new doctors and hospitals. Depending on where they live, some people will have few health insurance options to choose from, making the marketplaces less competitive when it comes to pricing premiums and different health care benefits. Rate increases for some premiums are already expected to be in the double-digits next year.
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Kevin Counihan, marketplace CEO in the Centers for Medicare and Medicaid Services, noted in a statement that 11 million people had been covered by health plans they bought on the exchanges and that insurance companies were adapting to new enrollees where they "compete for business on cost and quality rather than by denying coverage for people with preexisting conditions."
"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 and every year after that," he said.
Bertolini said in the statement that providing affordable, high-quality health care options was no longer possible given that a high number of people in the plans needed costly care. The company reportedly lost $430 million since the exchanges started running in January 2014.
"This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns," he said.
Aetna's leadership had previously said it had serious concerns about the sustainability of the exchanges. It isn't the only one. UnitedHealth Group, the country's largest insurer, announced in April that it would be pulling out of the marketplaces, and Humana announced some pull back as well. A dozen nonprofit health insurance cooperatives shut down last year, and Blue Cross Blue Shield has said it would consider dropping out.
Aetna and other health insurance companies may re-evaluate their participation for 2018 and choose to re-enter the exchanges.
The news comes just a month after the Department of Justice announced it was blocking Aetna's proposed $34 billion merger with Humana to expand its options for seniors.
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