Anthem threatens further ACA exchange exits if subsidies aren't funded

Anthem’s individual market membership was 1.78 million in the second quarter of 2017—down from 1.81 million in Q2 2016. (Matthew Hurst/CC BY-SA 2.0)

Anthem executives say the insurer may exit more Affordable Care Act exchanges if it doesn’t soon learn whether funding for the cost-sharing reduction program will continue.

Anthem, which currently sells ACA exchange policies in 14 states, has already said it will exit three states—Ohio, Wisconsin and Indiana—in 2018. 

While insurer has filed an initial rate request in all of the other states in which it operates, CEO Joseph Swedish noted during Anthem’s second-quarter earnings call on Wednesday that it still could pull out of more areas due to “marketplace uncertainties”—primarily whether the CSR program will continue to be funded.

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“If we aren't able to gain certainty on some of these items quickly, we do expect that we will need to revise our rate filings to further narrow our level of participation,” he said. 

Anthem and all other participating insurers have until Sept. 27 to make their final decisions about which exchanges they will participate in. As of the second quarter, Anthem’s individual market membership was 1.78 million—down from 1.81 million in the second quarter of 2016. 

Later in the call, Anthem Chief Financial Officer John Gallina also noted that the insurer has requested steep rate increases—around 20%—in some states where it operates and might have to hike them another 20% if CSR funding disappears.

“There's a cascading effect,” Swedish added.

Overall in the quarter, Anthem reported a net income of $855.3 million, or $3.16 per share. That compares to $780.6 million, or $2.91 per share, in the second quarter of 2016. Its adjusted net income of $3.37 per share beat analysts' consensus estimate of $3.23 per share.

Despite lower membership in its individual business, Anthem’s overall medical membership rose by 1.6% year over year to 40.4 million, driven in part by enrollment increases in its government business.

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