Humana merger partner Aetna announced late this evening it will dramatically scale back participation in health-care exchanges under the Affordable Care Act to reduce its losses.
The Hartford-based health insurer said it will serve just 242 counties from the current 778, according to a press release. The followed a similar announcement earlier this month from Humana, which said it plans to largely exit the marketplaces, reducing coverage to no more than 156 counties in 2017 vs. 1,351 today.
Aetna’s decision wasn’t entirely a surprise. In its second-quarter earnings report, CEO Mark Bertolini told Wall Street analysts the company halted plans to enter more states. “We are evaluating our footprint as it exists today to understand what solutions we can put forward to either fix the business or exit the business,” he said.
Aetna took a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since 2014 in individual plans.
Still, it underscored the challenges insurers are facing as the Affordable Care Act defies forecasts. The unexpectedly close attention consumers are paying to prices on ACA marketplaces is contributing to millions of losses at Louisville-based Humana and Aetna, leading both insurance giants to retreat as fewer healthy people than forecast have signed up, a point reflected in Aetna’s release.
“Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool,” Bertolini said. “Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population.
The insurer’s announcement comes amid its fight to save its proposed $37 billion merger with Humana after the Justice Department sued to block it.