In a blow to the healthcare law, Aetna — one of the largest health insurers in the country — announced Monday that it will significantly scale back its presence on the ObamaCare marketplaces next year.
The move comes as a range of insurers have complained of financial losses on the ObamaCare marketplaces.
The company said it will scale back from participating in 15 states this year to just four states in 2017.
“As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Aetna CEO Mark Bertolini said in a statement, citing a loss of $200 million in the second quarter.
The Obama administration argued the move is not a sign that the ObamaCare marketplaces are in trouble.
“Aetna’s decision to alter its Marketplace participation does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year and every year after that,” said the administration’s ObamaCare marketplace CEO, Kevin Counihan.
The move comes on the heels of pullbacks from other major insurers, including UnitedHealthcare and Humana.
The insurers have raised concerns about the sustainability of the ObamaCare marketplaces.
The mix of ObamaCare enrollees has been smaller and sicker than expected. Some experts say that insurers also set their premiums too low. Premiums are expected to rise more sharply in 2017, which could help insurers address some of the losses.
In the case of Aetna, however, ObamaCare supporters argue that the announcement is not a sign of broader problems with the law but instead a direct result of the administration suing to block the company’s proposed merger with Humana.
Backers argue that the Department of Justice’s announcement in July that it is suing to block the merger is the real cause of Aetna’s negative shift in tone on the healthcare law.
Sen. Elizabeth Warren (D-Mass.) said last week that Aetna was using its posturing about ObamaCare as a “bargaining chip” for its merger talks.
“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,” Warren said.
Asked if the DOJ’s actions on the merger had any relation to Monday’s announcement, Aetna spokesman TJ Crawford did not directly say yes or no.
“This is a business decision based on higher-than-projected medical costs that resulted in a second quarter pre-tax loss of $200 million, which we project will grow to in excess of $300 million by the end of 2016,” he said.
Sources say Aetna officials met with administration officials at the Department of Health and Human Services headquarters earlier Monday.
But Aetna ended up going through with its decision, making its announcement Monday night.
The company’s move means that in some areas of Arizona, there is no insurer slated to offer ObamaCare coverage next year, which would be an unprecedented situation curtailing access to the healthcare law’s benefits.
“We are working collaboratively with the Arizona Department of Insurance and remain confident that all Arizona residents will have access to coverage next year,” HHS spokeswoman Marjorie Connolly said.
A lack of competition in some places, particularly rural ones, has been a running concern around ObamaCare and part of the reason that President Obama and Democratic presidential nominee Hillary Clinton have proposed a public option in order to increase competition.
Aetna, like other insurers, has also pressed for changes to an ObamaCare program known as risk adjustment and has spoken with HHS about the issue.
Risk adjustment is meant to shift money from insurers with healthier enrollees to those with sicker enrollees to help with costs, but Aetna has said the payments are inadequate and pushed for the government to go further by actually subsidizing insurers through the program.
That change could require action from Congress, though. HHS recently announced it is working on smaller-scale changes to the program, which Aetna called encouraging.
“In the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population,” Bertolini said. “This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns.”
Insurers have also suffered from a shortfall in a similar program, called risk corridors. Republicans have denounced that program as a “bailout” of insurers and worked to limit the payments through it.
Aetna said it will “continue to evaluate” its participation on the ObamaCare marketplaces in the future and could expand its footprint if the situation improves.
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Aetna, for its part, said it is hopeful some solution can be worked out.
“[We] remain hopeful that we can work with policymakers from both parties on a sustainable public exchange model that meets the needs of the uninsured,” Bertolini said.
Updated 10:11 p.m.
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