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May 11, 2017

Aetna is exiting all ACA exchanges next year

Daily Briefing

    Aetna on Wednesday announced that it will completely withdraw from the Affordable Care Act's (ACA) exchanges for the 2018 coverage year.

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    The announcement comes after Aetna drastically reduced its exchange business for the 2017 coverage year. Aetna sold exchange plans in just Delaware, Iowa, Nebraska, and Virginia for 2017. Aetna already had announced that it would not sell 2018 exchange plans in Iowa and Virginia, and on Wednesday announced that it also will stop selling such plans in Delaware and Nebraska. The move means just one insurer will offer exchange plans in the Nebraska next year, according to Cynthia Cox, associate director for health reform at the Kaiser Family Foundation.

    Aetna is the second major insurer to completely exit the exchanges, following Humana, which earlier this year announced that it would withdraw from the exchanges for the 2018 coverage year. Anthem CEO Joseph Swedish has said his company also is reconsidering its exchange participation for 2018. Other major insurers, such as UnitedHealthGroup, already have scaled back their exchange participation.

    Reasons for Aetna's exit

    Aetna in a statement said it lost a total of $450 million last year on the nearly one million individuals enrolled in its individual health plans sold both on and off of the exchanges. Aetna spokesperson T.J. Crawford on Wednesday said the insurer anticipates that it will lose an additional $200 million on individual health plans it sold for the 2017 coverage year.

    Crawford cited "structural issues" with the ACA's exchanges, as well as "uncertainty that has surrounded the future of the exchanges for some time now" as reasons why the insurer is discontinuing its individual health plan business.


    Evercore ISI analyst Michael Newshel in a research note said Aetna's decision to exit the exchanges was "not a surprise given continued uncertainty about market stability and whether" the Trump administration will continue to pay insurers cost-sharing subsidies called for under the ACA. Insurers have said the subsidies are essential to stabilizing the exchange market.

    Republicans quickly seized on Aetna's exit to bolster their calls to repeal and replace the ACA.

    HHS Secretary Tom Price said Aetna's withdrawal "adds to the mountain of evidence that Obamacare has failed the American people," adding, "Repealing and replacing it with patient-centered solutions that stabilize the marketplace to bring down costs and increase choices is the only solution."

    However, Democrats blamed the administration for the exit, saying President Trump has created uncertainty for insurers.

    Sen. Tom Carper (D-Del.) in a statement said, "Instead of following through on [Trump's] promise to ensure that all Americans would have better and less expensive health insurance, the … administration has done just the opposite by sabotaging the ACA insurance [exchanges] in any possible way," which in turn "has sowed confusion and fear among Americans about whether they will be able to access health care." According to Carper, Aetna's decision to stop selling exchange plans in Delaware means just one insurer will offer exchange coverage in the state.

    Insurer agrees to sell exchange plans in Tenn.

    In related news, BlueCross BlueShield of Tennessee (BCBST) President and CEO JD Hickey on Tuesday sent a letter to the state's insurance commissioner stating that the insurer intends to sell 2018 exchange plans in the state.

    The decision means counties in the state in which no insurer had planned to sell 2018 exchange plans now will have at least one insurer option.

    BCBST had scaled back its participation in Tennessee's exchange market for the 2017 coverage year.

    Hickey in the letter wrote that the company's re-entry into certain market areas is not "a reflection of" its "perspective" on the individual health insurance market's stability, adding that it could not "justify" selling the plans "based solely on current political uncertainty." Instead, Hickey wrote that the insurer decided to re-renter certain market areas because it "believe[s] it is an extension of [its] mission to serve [its] fellow Tennesseans, especially those who do not have other options for coverage."

    Still, Hickey wrote that premium rates for the plans, which the insurer will file by July 1, will "price-in" the "downside risks" it will face from selling the exchange plans. In addition, Hickey wrote that the insurer could reverse course if there are changes that could further destabilize the market (Goldstein, Washington Post, 5/10; Wilde Mathews, Wall Street Journal, 5/10; Sullivan, The Hill, 5/10; Beasley, Reuters, 5/10; Livingston, Modern Healthcare, 5/10; Hellmann, The Hill, 5/9; Wilde Mathews/Radnofsky, Wall Street Journal, 5/9).

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