Aetna: On second thought, we're backing away from ObamaCare

Two weeks ago, the Department of Justice blocked Aetna’s attempts to merge with Humana and purchase Cigna. Today, Aetna announced that, without the economies of scale the merger would have provided, they will not expand its reach into new ObamaCare markets as originally indicated. In fact, they may pull out of the ObamaCare business altogether, leaving almost a million customers in 15 states to find another carrier:

Aetna (AET) said Tuesday it is canceling plans to expand into more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges. It expects to lose $300 million (pre-tax) on its Obamacare business this year. …

The performance of Aetna’s Obamacare business is deteriorating as policyholders seek more care than expected, the company said. Pharmacy costs are a particular problem.

Aetna had 838,000 exchange customers at the end of June.

Remember how utilization rates were supposed to stabilize by the end of the third year? Clearly, that’s not happening. ObamaCare consumers continue to be sicker and older, while younger and healthier Americans pay retail for their care and save thousands of dollars by choosing the tax penalty instead.

Meanwhile, Obama might have a tough welcome home when he returns to Chicago after he leaves office in January. Illinois residents got let off the hook last year on health-insurance premiums, but their luck appears to have run out. The Chicago Tribune reports that two of the major providers in the Land of Lincoln want double-digit increases in rates for 2017:

Insurers want to crank up the cost of health insurance premiums by as much as 45 percent for Illinois residents who buy coverage through the Affordable Care Act’s marketplace.

Blue Cross Blue Shield of Illinois, the most popular insurer on the state’s Obamacare exchange, is proposing increases ranging from 23 percent to 45 percent in premiums for its individual health-care plans, according to proposed 2017 premiums that were made public Monday. The insurer blamed the sought-after hikes mainly on changes in the costs of medical services. …

Coventry Health Care of Illinois proposed rate increases as high as 21 percent.

The Illinois Department of Insurance has until Aug. 23 to review the proposed rates and potentially try to negotiate them down. Final rates can be lower than the ones first proposed by insurers, and the proposed increases don’t reflect what consumers will actually pay, the U.S. Department of Health and Human Services was quick to caution Monday.

Year Four of ObamaCare looks to shape up a lot like Years One through Three: money-losers for insurers, and high costs hammering consumers. Rather than encourage competition, insurers are looking for ways out of these markets, with United Health already heading to the locker room. Consumers are increasingly locked into high-premium and high-deductible plans, costing them thousands in premiums and thousands out-of-pocket before they ever get a chance to benefit from their coverage.

Now that’s coming home to Obama’s support base and stomping grounds. Maybe he’ll stick around in Washington and New York for a long time to come.