After suffering significant losses on the health insurance exchanges in 2015, insurance giants UnitedHealth Group and Aetna announced recently that they may leave the exchanges next year.
Perhaps making the first move, UnitedHealth Group announced in April that it plans to exit all but a “handful” of exchanges in 2017, with departures that include the Georgia, Arkansas, and Michigan insurance exchanges.
The news that plans may bow out of the exchanges does not surprise Sally C. Pipes, president of the San Francisco-based Pacific Research Institute.
“UnitedHealth lost $720 million on 500,000 enrollees last year and is expecting an additional loss of $500 million this year,” says Pipes. “Aetna’s CEO recently voiced serious concerns about the sustainability of exchanges and the overall stability of the risk pool after losing $140 million last year. Humana, Blue Cross and Blue Shield have also reported losses in the millions.”
In its fourth quarter and full year 2015 earnings conference call in February, Tom Cowhey, vice president of Investor Relations for Aetna Inc., called the exchanges unprofitable for Aetna last year and expressed serious concerns about their sustainability. Specifically, Aetna is concerned about:
Overall stability of the risk pool, including enforcement of standards related to Special Election Period enrollment;
Lack of predictability and full transparency of the risk adjustment program; and
Newly proposed CMS regulations on network adequacy and standardization of benefits that would limit its ability to offer affordable, innovative exchange products.
However, Cowhey indicated that Aetna will continue to work constructively with CMS and lawmakers to “set this program on a more sustainable path and achieve the underlying goal of making healthcare more affordable and accessible.”
In May, an Aetna spokesman told The Wall Street Journal the insurer has no plans to withdraw its existing plans in state exchanges.