Healthcare experts have been warning that Republican dithering on a replacement for the Affordable Care Act would be a further discouragement for participating insurance companies.
Now, the first shoe has dropped: Aetna, which sharply reduced its ACA footprint this year, is signaling that it will be entirely out of the market in 2018.
Mark Bertolini, Aetna's chairman and chief executive, put it bluntly during a conference call Tuesday with investment analysts: "We have no intention of being in the market for 2018," he said. He cited "the unclear nature of where regulation's headed."
That lack of clarity, he said, means that Aetna won't know what the individual market looks like until 2019. "If you look at the notion of policy development, legislative language and then regulation," he said on CNBC, "the nearest time we could have a completely new program is 1/1/2019."
Bertolini's frank talk notwithstanding, Aetna did leave itself a tiny bit of wiggle room on its plans for 2018. It's still covering 240,000 ACA customers in four states — Virginia, Nebraska, Iowa and Delaware. That's down from 965,000 members in 15 states at the end of 2016. On CNBC, Bertolini hinted that the company might continue to sell plans in those states in 2018.
But a company spokesman said it's making no commitments: "We're evaluating our future" in those states, said the spokesman, T.J. Crawford. Although initial rate filings for individual ACA plans for 2018 are due from insurers by April 1, they don't have to be finalized until Sept. 30. He said Aetna "most likely" will file rates in the four states, but that won't bind the company to providing coverage next year.
In any event, Bertolini made it crystal clear that Aetna will not return to any of the 11 states it exited this year or enter any new ones, at least until 2019. Aetna says it lost $450 million pre-tax on the exchanges last year, when it recorded $2.27 billion in profit on $63 billion in revenue. Among the bright spots were its Medicaid business, where it added 44,000 members, largely from Medicaid expansion under the ACA.
Aetna's actions are the clearest sign yet that GOP-inflicted confusion about the future of the ACA will have negative consequences for individual insurance buyers.
As Bertolini explained, although Congressional Republicans and the Trump White House might repeal the ACA by April 1, there's virtually no chance they'll enact a workable replacement by then. He's right: Not only are Democrats fairly united in opposition to the sketchy proposals laid on the table thus far, but Republicans themselves haven't come to an agreement on the terms of replacement — or even whether there should be replacement.
What healthcare benefits will be required in coverage, the scale and structure of government subsidies for buyers, the incentives for healthy individuals to buy insurance — all that and more is up in the air. That poses a huge quandary for insurers in calculating rates for next year because they'll have no idea about the riskiness of the population they'll be offering to cover. After three years of experience with individual coverage under Obamacare, insurers were just beginning to get a handle on the market when they calculated rates for this year. But their actuarial tables were thrown into doubt when the presidential election of Trump and the retention of GOP majorities in both houses made repeal more likely.
The history of Aetna's participation in the ACA market is a tortured one. We've reported previously that as recently as last April, the company had been signaling its willingness to stick with the market despite financial losses, in the expectation that it would soon stabilize. Bertolini saw the ACA market as "a good investment" and was even contemplating an expansion from 15 states to 20 this year.
In August, however, Aetna stunned healthcare experts by staging a U-turn, pulling back to four states from 15 while complaining about red ink. Evidence soon surfaced, however, that that wasn't the real story, or at least the full story.
Company correspondence and internal emails showed that Aetna had tried to use its participation in the ACA as a bargaining chip to get favorable consideration from the Obama administration for its $34-billion merger with Humana. Despite Bertolini's public assurances that it regarded the merger as "a separate conversation" from its evaluation of the exchange business, Aetna warned that it would pull back on the exchanges if the Justice Department sued to block the merger. The DOJ filed suit July 21; Aetna announced its pullback Aug. 5.
The federal judge presiding over the lawsuit found this all more than suspicious. In his Jan. 23 ruling blocking the merger, Judge John D. Bates found that the company had deceived the public about its reasons for withdrawing from the exchanges and then tried to bury the evidence. Rather than pulling out chiefly as a business decision, he found, "Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger."
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