START OF 2018 OPEN ENROLLMENT PERIOD

Time: D H M S

Aetna CEO: 2014 QHP attrition only 3.4% thru end of year

Hat Tip To: 
Jed Graham

IBD's only honest reporter (to my knowledge), Jed Graham, gave me a heads up regarding an interesting item in Aetna's 4th Quarter Earnings Conference Call:

Shifting to public exchanges… We are pleased with our first year execution, particularly in light of the well-publicized challenges with the initial launch of the public exchanges. We ended the year with approximately 560 thousand on-exchange members, modestly ahead of our most recent projections. Additionally, while the open enrollment period is still on-going, we are on track to exceed our initial enrollment projections for 2015. Further, we have successfully transitioned the vast majority of our off-exchange membership to ACA-compliant plans, consistent with our previous projections. As we look at our total individual business, we now project that we will end the first quarter with approximately 1.1 million members, including up to 800 thousand on-exchange members.

Graham forwarded this to me because he thought I'd be most interested in the part at the end stating that Aetna expects to end up with 800K ACA exchange enrollees nationally by February 15th (well, technically by March 30th, but any additions after 2/15 should be nominal, assuming no deadline extension).

However, when I compared this to Aetna's 2014 exchange enrollment, it turns out it was 720K, so 800K would only be an 11% increase over last year. Since HHS is projecting a 30% increase and I'm projecting a 56% increase, this news doesn't really mean much (you could also argue that it's indicative of only an 11% bump over last year nationally, but remember, this is just a single company; it could simply be a matter of shifting market share, especially since the competition has increased dramatically, including new major players such as UnitedHealthCare jumping in this year).

However, what does interest me is this part:

We ended the year with approximately 560 thousand on-exchange members, modestly ahead of our most recent projections. 

Remember this "scary, unexpected" attrition report from back in August?

As I noted at the time, you can't double-count "never paid" and "dropped off". Either define both as "attrition" or report them separately, but don't do both, which is what a lot of articles were doing at the time.

Here's the thing: While Aetna's payment rate was lower than most other companies (somewhere between 81 - 86%, depending on which of their statements you go by), 580,000 people did pay their first premium...which means that if they ended the year with 560K, that means they only lost 3.4% of their 2014 enrollees by New Year's Eve. They were expecting to drop to "just over 500K" (13.8%).

Don't get me wrong, I'm not saying that the 14-19% non-payment rate is a good thing (though obviously other companies had a much higher payment rate for whatever reasons), I'm just saying that in this particular case, the drop-off ended up being far less than people were wringing their hands over at the time.