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CVS Health Poised to Reenter ACA Marketplaces

Publication
Article
MHE PublicationMHE March 2021
Volume 31
Issue 3

Aetna got out of the ACA marketplace business in 2018. Now CVS Health, which completed its acquisition of the insurance company in late 2018, is hopping back in and will brand the policies as a “CVS Health-Aetna” product for the first time.

Aetna got out of the ACA marketplace business in 2018. Now CVS Health, which completed its acquisition of the insurance company in late 2018, is hopping back in and will brand the policies as a “CVS Health-Aetna” product for the first time, Karen S. Lynch, the company’s new president and CEO, said during an earnings call last month.

“As the ACA has evolved, there is evidence of market stabilization and remedies to earlier structural issues,” Lynch said during the Feb. 16 call. “It is now time for us to participate in these markets.”

Lynch said CVS Health would start selling coverage that would start in January 2022, but she shared no details about how many markets the company might sell CVS Health-Aetna coverage in or which ones.

She noted that the ACA marketplace market was a big one of 10 to 15 million people. After a Supreme Court ruling favoring insurers, CVS Health was among those that received a hefty ACA risk corridor payment. The company booked a $307 million risk corridor payment in 2020.

The ACA marketplace plans may also benefit from President Joe Biden’s proposal to increase the subsidies that lower premium costs for Americans who buy ACA marketplace coverage.

CVS Health is a huge ($286.7 billion revenues last year), publicly traded company, but like many of its competitors, it has seen the proportion of its government business (Medicare Advantage, Medicaid) grow relative to its commercial business.

For example, the number of people in its insured commercial plans decreased from 3,591,000 in 2019 to 3,258,000 in 2020, a difference of 333,000, or 9.3%, according to year-end results posted at the time of the earnings call. Meanwhile, the number of people in its Medicare Advantage plans increased from 2,321,000 in 2019 to 2,705,000 in 2020, an increase of 384,000, or 16.5%.

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