If you’ve been following the statements of Aetna CEO Mark Bertolini, this won’t come as much of a surprise. During an earnings call Tuesday, Aetna signaled it would likely exit more Obamacare exchanges in 2018. From Reuters:
“We continue to evaluate our footprint with a view towards significantly reducing our exposure to individual commercial products in 2018,” Aetna Chief Financial Officer Shawn Guertin said during a conference call.
In an interview, Guertin explained that the company is making decisions about the three remaining states where it sells these plans based on the current situation.
Aetna, which has 255,000 customers in individual plans that comply with Obamacare, said customer medical costs were high and recorded a $110 million premium deficiency reserve in the first quarter for future losses.
Aetna announced last month that it was pulling out of the exchange in Iowa. “Earlier today we informed the appropriate federal and state regulators that Aetna will not participate in the Iowa individual public exchange for 2018 as a result of financial risk and an uncertain outlook for the marketplace,” and Aetna spokesman said at the time.
In February, Aetna’s CEO, Mark Bertolini, said Obamacare was in a “death spiral.” He also predicted, “that in ’18 we’ll see a lot of markets without any coverage at all.” At the time, Bertolini said Aetna hadn’t made final decisions about its participation in remaining markets.
Last week, Anthem insurance, which operates Blue Cross plans in 14 states, said it would move ahead with plans for 2018, but warned it could drop out in some areas or raise prices dramatically depending on what the Trump administration did in the meantime.
The concern is over cost-sharing rules which obligate insurers to reduce the cost of co-payments and deductibles for enrollees near the bottom of the income scale. The government reimburses insurers for those costs directly. However, Congress has never appropriated money for those payments and it’s possible the administration could cut them off. If it did, insurers like Anthem would still have to reduce costs for enrollees even though it wasn’t being reimbursed for the expense of doing so. Anthem’s CEO warned last week that making up for those costs through premiums (rather than directly from the government) would require a 20% price hike next year.
The Trump administration has reportedly promised to continue making the payments for now, but Democrats in Congress worry that the administration could change its mind at any time and have been trying to add money for the payments into a budget bill. But at this moment, it appears the Trump administration is cooperating to keep the law going another year.
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