Anthem Inc. has stuck with the Obamacare exchanges despite losses but Wednesday the company’s CEO announced that, unless conditions improve in the coming year, Anthem will join other major insurers on the sidelines. From Bloomberg:
“If we do not see clear evidence of an improving environment and a path towards sustainability in the marketplace, we will likely modify our strategy in 2018,” Anthem Chief Executive Officer Joseph Swedish said on a call Wednesday discussing third-quarter results. “Clearly, 2017 is a critical year as we continue to assess the long-term viability of our exchange footprint.”
Anthem sells health coverage under the Blue Cross Blue Shield brand in 14 states. The company will continue offering plans for next year in the new markets created by the Affordable Care Act. If it pulls back in 2018, it will leave mostly regional and not-for-profit firms on the markets…
“The financial performance in individual ACA compliant products has been disappointing as membership has been short of our original expectations,” Swedish said. The company could also pull back from some states and not others, executives said on the call.
Anthem is one of the five largest insurance companies in the United States. Three of the others—UnitedHealth, Humana and Aetna—have previously pulled back from the exchanges. UnitedHealth announced it was dropping out back in April after losses of $1.1 billion in the first two years. Humana announced it was pulling out of most Obamacare markets in July, just hours after the government announced it would sue to block a planned merger between Humana and Aetna. Aetna announced it was backing away from the exchanges in August.
As for Anthem, it was also part of a planned merger with Cigna. While Humana and Aetna took the ‘stick’ approach to the government attempt to block their merger, Anthem took the ‘carrot’ approach. The company announced in July that it planned to expand its Obamacare offerings into nine additional states if it’s merger was allowed to go through. However the company warned that without the economy of scale the merger would provide the expansion might not be possible.
Obviously the carrot approach didn’t work. The government did not change its position on the Anthem merger with Cigna and now the company is putting the government on notice that 2017 could be its last year on the exchanges unless things improve.
Anthem currently insures nearly 900,000 Obamacare customers.