Are exchanges failing? Five plan participation updates

August 19, 2016

As Aetna bows out of health insurance exchanges, more questions about viability are cropping up. Find out which other plans are exiting the health insurance exchanges.

 


As Aetna bows out of more health insurance exchanges, more questions about viability are cropping up. Here are five health insurers that are reconsidering exchange plan participation.

 

 

 

 

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 in 2015 and expressed serious concerns about their sustainability. However, Cowhey indicated that Aetna would 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.

On August 15, however, Aetna changed its tune, saying it would reduce its individual public exchange participation from 778 to 242 counties for the 2017 plan year. The company noted that it would continue exchange presence in Delaware, Iowa, Nebraska and Virginia.

READ: Three changes that could help exchange plans thrive

“Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward,” said Aetna Chairman and CEO Mark T. Bertolini in a statement.

Shortly after the announcement, the Donald Trump campaign website posted a statement from Dan Kowalski, deputy national policy director. Kowalski referred to the decision to leave the exchanges as “The latest blow to this broken law that is slowly imploding under its regulatory red tape.”

 

 

 

 

Back in November of 2015, UHG began expressing indecision over whether it would continue to participate in ACA exchanges. A statement from the company noted an estimated $425 million reduction in earnings in the fourth quarter of 2015 "driven by 2015 and 2016 individual exchange product pressure.”

In April, UGH, which offered exchange plans in 34 states in 2016, announced plans to exit all but a “handful” of them in 2017. Departures UHG noted include the Georgia, Arkansas, and Michigan insurance exchanges.

Sally C. Pipes, president of the San Francisco-based Pacific Research Institute, told Managed Healthcare Executive earlier this year that the news of UHG’s exit from many exchanges did not surprise her. “UnitedHealth lost $720 million on 500,000 enrollees last year and is expecting an additional loss of $500 million this year,” Pipes said.

Jon Kingsdale, PhD, professor of healthcare policy at Brown University’s Executive Master of Healthcare Leadership program, and director, Wakely Consulting Group, told Managed Healthcare Executive that the UHG news was of “modest significance for the marketplaces.”

“United is a small percent of enrollment on the marketplaces and is usually not one of the better-priced or lower-priced plans available in a very price-sensitive market-those two facts are connected,” he said. “It is frankly not very well suited, or ideally suited, to compete on ACA marketplaces because the competitive advantage that a national plan such as United offers is not as well suited as local plans.”

 

 

 

 

In a statement issued on July 24, Humana said it will discontinue “certain on-exchange individual products across a number of geographies for 2017 and exit substantially all Affordable Care Act (ACA) compliant off-exchange individual markets.” 

The individual offerings for 2017 will cover no more than 156 counties across 11 states, down from 1,351 counties in 2016, according to the company.

READ: Consumers exploit health insurance exchange loopholes

The news follows a report in May by the Indianapolis Business Journal that Humana will not sell Affordable Care Act plans in Alabama and Virginia in 2017.

The July 24 statement issued by Humana also comes on the heels of the July 21 news that the government has filed a lawsuit to block the Aetna-Humana merger.

 

 

 

 

Not all insurers are seeing the downside when it comes to exchange plan participation. Cigna, which sold plans on exchanges in seven states in 2016, recently said it plans to expand in 2017 to exchanges in Chicago, Raleigh and Durham in North Carolina, and Richmond and northern Virginia, according to The Hill.  

In April, Cigna spokesperson Joe Mondy told FOXBusiness.com, “Cigna expects to continue participating in the individual insurance market, and is currently in the process of filing 2017 individual plans. We currently intend to selectively expand our public exchange presence into a few new geographies in 2017.”  

Until recently, it appeared that Anthem, which is awaiting approval to merge with Cigna, is on the same page. A spokesperson for Anthem told FOXBusiness.com, “We remain committed to the public exchange market and the vital role it plays in providing many individuals with access to affordable, high-quality health care.”

Still, at the end of July, Anthem said it is now projecting losses on its exchange plans for 2016. Joseph R. Swedish, Anthem chief executive, told The Wall Street Journal that the insurer will be re-examining its commitment to selling exchange plans.