Aetna’s announcement that it will reconsider its participation in some Affordable Care Act marketplaces has amplified concerns about the long-term viability of the exchanges.
In Aetna’s second-quarter earnings report, the company said it will abandon its plans to expand its ACA exchange presence in 2017 and evaluate its future participation in the 15 state marketplaces in which it operates. The insurer expects to lose $300 million on its ACA plans this year, CEO Mark Bertolini said during a call with investors and analysts.
As has been the case with both UnitedHealth and Humana, higher-than-expected utilization costs are the reason Aetna is now re-evaluating its ACA business. High costs related to specialty pharmacy services, in particular, is one major driver of Aetna’s financial struggles with its exchange products, Bertolini added during the call.
At least one expert sees the insurer exits as a sign that lawmakers should intervene.
If the Congress does not roll up their sleeves and figure out how to improve this marketplace, it’s going to be difficult to figure out how it’ll continue in the future,” Avalere Health’s Dan Mendelson tells Bloomberg.
A spokeswoman for the Department of Health and Human Services, though, tells the news outlet that HHS has “full confidence” the ACA marketplaces will continue to thrive.
Aetna’s stance is an abrupt turnaround from Bertolini’s previous comments suggesting the insurer planned to stick it out on the exchanges while the market stabilizes. “From a tactical standpoint, this is not breaking the bank one way or the other," he said in January, noting that Aetna’s individual business comprises only about 6 percent of its total revenue.
In prepared remarks during Tuesday’s call, Bertolini reiterated his support for the exchanges, but added he is concerned about ACA plans’ effect on the insurer’s margins.
“Our strategy has always been to participate on the exchanges in a manner that will allow us to gain enough membership to learn how best to provide affordable healthcare coverage for previously uninsured Americans,” Bertolini said. “At the same time, we are committed to being good stewards of our balance sheet and managing the financial risk and level of investment associated with this opportunity.”
- access Bertolini’s prepared remarks and the earnings webcast