Humana may become the latest major health insurer to pull out of some Affordable Care Act marketplaces, as it seeks to curtail losses on its individual market policies.
The insurer expects to propose "a number of changes" to its ACA-compliant individual market offerings in 2017, which could include "certain statewide market and product exits both on and off exchange, service area reductions and pricing commensurate with anticipated levels of risk by state," according to its first-quarter earnings statement.
Humana had indicated as far back as its third-quarter earnings report in November that its individual commercial performance was lagging, saying it will discontinue certain products and make some market exits to compensate.
In the first quarter, Humana reported overall earnings per share of $1.56, down from $2.82 per share in Q1 of 2015. Its individual commercial membership dropped 21 percent year-over-year, while its individual Medicare Advantage membership increased 5 percent.
"We are encouraged by the early indicators we are seeing in our Medicare and healthcare services businesses but remain cautious while our healthcare exchange experience continues to develop," Brian A. Kane, Humana's senior vice president and chief financial officer, said in the earnings statement.
The news that Humana is considering an exchange pullback follows UnitedHealth's confirmation that in 2017 it will exit most of the exchanges in which it currently offers ACA-compliant plans. The insurer had warned of such a move as early as late last year, citing unsustainable losses on its exchange policies.
Mark Bertolini, the CEO of Humana's proposed acquirer, Aetna, said in the insurer's Q1 earnings report last week that he sees the ACA exchange business as a "good investment," noting that its first-quarter medical membership in individual commercial plans exceeded expectations while underwriting margins were consistent with expectations.
Experts, including American's Health Insurance Plans CEO Marilyn Tavenner, expect 2017 exchange plan premiums to increase given some insurers' struggles to turn a profit on their individual marketplace policies.
To learn more:
- here's Humana's Q1 earnings report
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