Jeff Byers | August 2, 2016
•Aetna on Tuesday morning announced it intends to withdraw expansion plans on the ACA markets in 2017.
•The announcement reverses hints from the insurer to broaden ACA market efforts which stated it “preserved…options to enter certain new geographies pending careful evaluation of marketplace conditions.”
•The carrier also confirmed rumors it would sell off Medicare Advantage assets by announcing it and Humana entered into separate agreements to sell respective Medicare Advantage assets to Molina Healthcare for a total estimated $117 million in cash for both transactions.
Dive Insight:
The announcements come alongside the release of Aetna’s Q2 financial reports. Total revenue for the second quarter was $16 billion and the insurer projects a full-year net income of $6.48 per share, up from $6.28. Net income for the quarter was booked as $790.8 million, or $2.23 per share.
However, Aetna’s CEO Mark Bertolini doesn’t seem as keen on the insurer’s ACA exchange strategy, an area Aetna previously and repeatedly stated it would continue operations. But financial forecasts can change strategies. On a conference call this morning, Bertolini said Aetna expects to lose more $300 million on the exchanges this year, Forbes reported.
“While we are pleased with our overall results, in light of updated 2016 projections for our individual products and the significant structural challenges facing the public exchanges, we intend to withdraw all of our 2017 public exchange expansion plans, and are undertaking a complete evaluation of future participation in our current 15-state footprint,” Bertolini said in a prepared statement.
The news comes as the nation’s big insurers are rethinking their individual market strategies. Some, like UnitedHealth, are deciding to largely get out of the markets. Others, like Cigna, are trying to get into some exchange markets they see as being profitable, such as the Chicago market.
The coming months will be interesting to watch as binding plan agreements are forged between insurers and state regulators before the end of next month.
MA assets
As a result of the Medicare Advantage deals, Molina is expected to gain about 290,000 Medicare Advantage members in 21 states. The sale was done to ease antitrust concerns over the pending $37 billion Humana/Aetna merger. Last month, the Justice Department filed a suit to block the action as well as the pending Anthem/Cigna merger.
On July 21, Principal Deputy Associate Attorney General Bill Baer stated the agency’s investigations show Aetna’s acquisition of Humana would hurt seniors that rely on Medicare Advantage. In response to proposed remedies from the insurers including divestitures to smaller market players, Baer also stated the proposed remedies have been impractical, incomplete and are unlikely to assuage the competition concerns.
However, Aetna is optimistic the Medicare Advantage deal will help federal regulators approve the deal. On the Aetna-Humana combination, Bertolini and Humana CEO and President Bruce Broussard commented in a prepared statement, “We look forward to making our position clear in court, where the facts will show that our combination will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers.”
The Medicare Advantage plans involved in the transactions include certain Aetna Medicare Advantage plans in Alabama, Arkansas, Florida, Georgia, Illinois, Louisiana, North Carolina, Nevada, Ohio, Oklahoma, Texas, Virginia and West Virginia, and certain Humana plans in Delaware, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, Pennsylvania, South Dakota and Utah.
Source: Health Care Dive
http://www.healthcaredive.com/news/aetna-rethinks-its-aca-exchange-strategy/423703/