END OF 2018 OPEN ENROLLMENT PERIOD (41 states)

Time: D H M S

Aetna no longer glad they met ya: Carrier reverses course just 3 months later

Less than 3 months ago, in mid-May, Aetna Inc. made splashy headlines by announcing that not only did they plan on sticking with the ACA individual market exchanges in the 15 states they were already participating in, they were even considering expanding participating to several additional states:

Health Insurer Aetna Inc on Wednesday said it plans to continue its Obamacare health insurance business next year in the 15 states where it now participates, and may expand to a few additional states.

"We have submitted rates in all 15 states where we are participating and have no plans at this point to withdraw from any of them," said company spokesman Walt Cherniak. But he noted that a final determination would hinge on binding agreements being signed with the states in September.

Aetna sells the individual coverage on exchanges created by the Affordable Care Act, also called Obamacare. By also filing proposed rates in several other states, Aetna said it had preserved its options to participate in them as well next year. It declined to identify the potential new markets.

Yeah, well, that was then; this is now. As Bruce Japsen reported last week, Aetna has done a complete 180º and is now saying that not only won't they be expanding into additional states, they may very well pull out of some of the 15 states they're in now:

In addition, Aetna said its worsening performance on public exchanges has forced the company to rethink its 2017 expansion plans and evaluate all of its individual plans in 15 states where it currently sells Obamacare, company chairman Mark Bertolini said Tuesday. Humana has already said it is pulling off most ACA exchanges for next year. And rival UnitedHealth Group UNH +0.20%, too, is scaling back to three states, leaving Anthem WLP +% and Blue Cross and Blue Shield plans as the main Obamacare providers across the country.

...Bertolini said Aetna is expected to lose more than $300 million this year on ACA business and therefore needs to examine markets across the country. The decision on which markets it will stay in will be made before the end of September when regulators need to know whether the company will be a choice for consumers seeking coverage for 2017.

Here's the 15 states where Aetna is currently offering exchange policies. Note that "pulling out" of a given state may only mean reducing the number of counties within that state, or it might mean dropping out of the ACA exchanges while remaining in the off-exchange market:

Arizona, Delaware, Florida, Georgia, Illinois, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Texas and Virginia.

There's been a lot of talk about the suspiciously convenient timing between the Justice Dept's announcement that they're suing to block Aetna's merger with Humana and this surprising turnabout announcement by Aetna. The idea here is that Aetna is trying to play hardball with the Obama administration over the merger by trying to blackmail them into backing off on opposition to the merger by holding their ACA participation hostage.

On the other hand, it could also be argued that it's the HHS Dept. which could actually hold the upper hand here, since I assume they can hold those fat, profitable Medicare Advantage contracts out as a bargaining chip in return for requiring Aetna participation in the exchanges. As Andrew Sprung noted:

It seems that insurers are perfectly happy and prosperous competing in the markets where the government is the payer -- Medicaid managed care and Medicare Advantage. What if the ACA had offered all adults under age 65 who lacked access to employer-sponsored insurance a program something like the Basic Health Plans (BHPs) that the law allowed states to establish for people with incomes in the 139-200% FPL range? That is, a program rather like Medicaid, paying perhaps somewhat higher rates, and offering enrollees a choice of plans from among a handful of MCOs? (So far, New York and Minnesota are the only states that have established BHPs.)

In this case, Sprung was putting things in terms of simply expanding managed Medicaid/Medicare across the board to become the de facto "public option"...but regardless, it seems to me that the framing here should really be more of a "loss leader" mindset. Yes, Aetna may lose $300 million on their individual market division this year...but overall they saw an increase in their net income, to over $780 million for the second quarter on top of $720 million in the first quarter. Assuming the 2nd half of the year is similar, that means they're looking at around $3 billion in net income for the year.

Not much else for me to add here; this certainly isn't good news coming on top of UnitedHealthcare and Humana's recent announcements...but at the same time, there's a difference between threatening to drop out and actually doing so, and I've seen a number of stories this week which falsely suggest that Aetna has announced that they're pulling out of states, which simply hasn't happened as of yet.