Aetna to Pull Back From Public Health Care Exchanges
Posted on August 17, 2016
THE NEW YORK TIMES
By ROBERT PEAR
AUG. 16, 2016
WASHINGTON — In a blow to President Obama’s health care law, Aetna, one of the nation’s major insurers, said Monday that it would sharply reduce its participation in the law’s public marketplaces next year.
Aetna said it would no longer offer individual insurance products on the exchanges in about two-thirds of the 778 counties where it now provides such coverage. The company will maintain a presence on exchanges in Delaware, Iowa, Nebraska and Virginia, it said.
In recent months, the large insurers UnitedHealth and Humana also said that they intended to pull back from the online exchanges, and other insurers are struggling to break even in marketplaces where low prices appear to be the top priority for low-income consumers.
The exchanges are a centerpiece of the Affordable Care Act: the only place where consumers can obtain subsidies to buy health insurance, which most Americans are required to have under the 2010 law. About 11 million consumers have coverage through the marketplaces, and about 85 percent of them receive subsidies in the form of tax credits.
Mark T. Bertolini, the chairman and chief executive of Aetna, said the company was responding to financial losses: “a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products.”
“As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Mr. Bertolini said. But, he added, the company cannot provide affordable, high-quality plans through the exchanges without a larger number of healthy people to help offset the costs of coverage for less healthy consumers.
“Individuals in need of high-cost care” account for a disproportionate share of the enrollment in Aetna’s marketplace plans, and the federal government does not adequately adjust its payments to account for these costs, he said.
Obama administration officials reacted angrily to Aetna’s announcement. They suggested that Aetna was retaliating against the administration because the Justice Department filed suit last month to block Aetna’s proposed acquisition of Humana. Attorney General Loretta E. Lynch said that transaction would reduce competition in violation of federal antitrust law.
Kevin J. Counihan, the chief executive of the federal insurance exchange, said the marketplace would remain strong and vibrant despite Aetna’s decision.
“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 pre-existing conditions,” Mr. Counihan said Monday.
In a conference call with securities analysts in April, Mr. Bertolini said that Aetna had 911,000 members with individual coverage through the exchanges and added, “We see this as a good investment.”
Senator Elizabeth Warren, Democrat of Massachusetts, said she saw a possible connection between the antitrust case against Aetna and its decision to reconsider participating in the exchanges.
“Aetna may not like the Justice Department’s decision to challenge its merger, and it has every right to fight that decision in court,” Ms. Warren said in a Facebook post last week. But, she said, “the health of the American people should not be used as bargaining chips to force the government to bend to one giant company’s will.”