As DOJ blasts Aetna/Humana & Anthem/Cigna mergers, Humana pulls out of 88% of counties

The Dept. of Justice is suing to block both of the big mega-mergers between Aetna/Humana and Anthem/Cigna.

Meanwhile, Humana just released their quarterly earnings report [correction: their 2017 Earnings Guidance Report]...and there's some big news buried in it.

Thanks to Zach Tracer for the heads up:

The company has also notified relevant DOIs of its intent to discontinue certain on-exchange Individual products across a number of geographies for 2017 and exit substantially all Affordable Care Act (ACA) compliant off-exchange Individual markets. As a result, the company’s 2017 geographic presence for its Individual offerings is expected to cover no more than 156 counties across 11 states, down from 1,351 counties across 19 states in 2016. Humana expects 2017 premiums associated with ACA-compliant offerings in the range of $750 million to $1 billion versus approximately $3.4 billion projected for FY16. The rate review and approval processes with the related states are ongoing.

This isn't really that big of a shocker; Humana had already announced that they were dropping out of Alabama, Kansas, Virginia, Wisconsin, Nevada, Colorado and Michigan. Still, there were some other states which were unknowns. Their financial report doesn't actually list which states they're sticking around in, so there's one more that they're dropping out of (a total of 8) and 11 more where they're staying.

As for the enrollment impact, my last tally was only 37,000 across the 7 states listed above...but the last bold-faced sentence sure makes it sound like a bigger deal than that; a 75% premium revenue drop certainly suggests that they expect their national enrollment in individual plans to drop by about 3/4. The last time I checked, Humana had around 550,000 people enrolled in ACA exchange policies, plus an unknown number of off-exchange enrollees. 37K is only a tiny fraction of that, so obviously I'm missing a lot of people here.

The key to this discrepancy appears to be in the county drop: From 1,351 to just 156. That's an 88% reduction in the number of counties served...and those 156 are spread across 11 states, for an average of just 14 per state, though I don't know what the populations of those 156 are.

Just for the record, here's the total number of counties in the 7 states above:

  • Alabama: 67
  • Kansas 105
  • Virginia: 95
  • Wisconsin: 72
  • Nevada: 16
  • Colorado: 64
  • Michigan: 83

...for a total of 502. Humana may not be participating in all of these at the moment anyway, but if they are, that would leave 693 more counties that they're dropping out of among 12 other states (the 11 they're staying in, plus the 1 unknown state they're dropping out of).