Aetna to drastically scale back its 2017 ACA exchange business

Will offer plans in just four states

Aetna on Monday announced plans to significantly reduce its Affordable Care Act (ACA) exchange business for the 2017 coverage year.

The insurer said it will sell exchange plans in just four states for 2017—Delaware, Iowa, Nebraska, and Virginia—down from 15 states where it sold 2016 exchange plans.

Specifically, Bloomberg reports, Aetna will exit markets in Arizona, Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, and Texas.

The number of counties in which Aetna will sell coverage will fall from 778 to 242.

A reversal

The announcement marked a reversal from Aetna's previous optimistic outlook on the exchanges. The insurer last year said it planned to expand its ACA exchange business for 2017 to five additional states.

However, Aetna abandoned those plans earlier this month after reporting "poor performance" on its exchange business this year and projecting "disappointing" expectations for such offerings next year. The company said it expects to lose $300 million on individual exchange plans in 2016, about triple the amount it lost on such coverage in 2015.

On Monday, the insurer cited significant financial losses as the main reason for scaling back its exchange business.

Aetna CEO Mark Bertolini in a statement said, "55 percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population." He added, "Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool."

Judge schedules December trial for DOJ's challenge to Aetna-Humana merger

Bertolini said the move will "limit [Aetna's] financial exposure moving forward," adding that the company "may expand [its] footprint in the future should there be meaningful exchange-related policy improvements."

Possible implications

According to the Wall Street Journal , Aetna's decision likely will fuel concerns about competition within the exchanges.

For example, Arizona's Pinal County is now at risk of having no insurers sell exchange plans in the area for the 2017 coverage year, according to Stephen Briggs, a spokesperson for the Arizona Department of Insurance. "It's a concern for us," he said, adding that the department does not "have any legal leverage to compel anyone to offer a plan." However, Briggs said the department is speaking with insurers about offering exchange plans in Pinal, noting that "circumstances could change."

An HHS spokesperson said the department is "working collaboratively with the Arizona Department of Insurance and remain[s] confident that all Arizona residents will have access to coverage next year."

HealthCare.gov CEO: Exchanges will still 'bring quality coverage to millions'

The announcement follows news that other major insurers, including UnitedHealth Group and Humana, plan to scale back their exchange business next year.

HealthCare.gov CEO Kevin Counihan said, "It's no surprise that companies are adapting at different rates to a market where they compete for business on cost and quality rather than by denying coverage to people with preexisting conditions." He added, "Aetna's decision to alter its [exchange] participation does not change the fundamental fact that the [exchange market] will continue to bring quality coverage to millions of [U.S. residents] next year and every year after that."

However, Jim O'Connor, a principal at Milliman, said insurers' exits from the exchanges are creating "an erosion of freedom of choice" among different insurance companies and providers (Sullivan, The Hill, 8/15; Demko, Politico, 8/15; Wilde Mathews, Wall Street Journal, 8/15; Humer, Reuters, 8/15; Tracer, Bloomberg, 8/16).

Four principles for insurers to establish their health plan diplomacy

Health plans have a lot in common with the modern diplomat. Diplomats have to be objective, but still empathize with the needs of others. They play a central role in an industry, without directly controlling stakeholder behavior. Finally, they have to persuade their partners to act in the best interest of everyone involved.

Health plans typically track the actions of their members, but for successful Health Plan Diplomacy, health plans should track their own actions. In our infographic, we’ve included four diplomatic principles that plans should apply to their member interactions and the corresponding metrics to measure progress.

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