The nation’s No. 3 insurer said this week it will reduce the number of states in which it sells policies on government exchanges from 15 to three or four.
Aetna, Inc, decided to pull out of the 11 states amid sizable losses on it’s individual policy business. The states remaining are Delaware, Iowa, Nebraska and Virginia.
“Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward,”said Aetna Chairman and CEO Mark Bertolini Aug. 15. “More than 40 payers of various sizes have similarly chosen to stop selling plans in one or more rating areas in the individual public exchanges over the 2015 and 2016 plan years, collectively exiting hundreds of rating areas in more than 30 states. 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’s action follows on the heels of similar moves by major insurers UnitedHealth Group and Humana, which have also cited financial losses on the government exchange business.
Aetna is attempting to buy Humana and is the target of a Justice Department anti-trust lawsuit, fueling speculation that Aetna’s move is also swipe at the federal government.
The risk adjustment mix, the number of healthy versus sick people who sign up for exchange plans is unbalanced, several insurers contend. Major insurers are unlikely to come back, unlness changes and more healthy people sign up and pay premiums to offset payouts for the sick, according to several analyses.
Aetna’s pullback also poses a unique problem for the Obama administration as Arizona will be left without an exchange plan option for its residents.
In addition to Arizona, Aetna is pulling out of Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina and Texas.