The nation’s third largest health insurer is painting a cloudy picture of its future on the Affordable Care Act’s insurance exchanges.
Aetna Chairman and CEO Mark Bertolini said Tuesday that his company will announce by April 1 whether it plans to stay beyond this year in any of the four states where it currently sells coverage, and it’s “really impossible to consider entering any new markets.”
“We have nothing but bad news in front of us right now,” he told The Associated Press.
Aetna, which reported an otherwise strong fourth quarter, lost $450 million on ACA-compliant coverage last year. That’s $100 million more than it expected.
Plus, Bertolini noted that no new initiatives to improve the markets will be enacted by April 1, which is the ACA deadline for health insurers to state whether they will participate in next year’s exchanges.
Republicans in Congress and President Donald Trump have vowed to repeal and replace the ACA.
Yet nearly seven years after the law passed, Republicans still don’t agree on a replacement plan. Trump has talked about “insurance for everybody,” while congressional Republicans say they want to provide “universal access,” a term whose meaning isn’t clear. Republicans have also promised they won’t leave stranded those who are currently covered under the program.
The prospect of an end date for the exchanges has led to anxiety that insurers will start fleeing these markets, to avoid being the last one selling coverage and getting stuck with all the costly patients.
The state-based public exchanges have helped millions of people gain health coverage, many with assistance from income-based tax credits. But several insurers have said this relatively small slice of their business generates huge losses, and customers in many markets have dealt with soaring premiums.
Companies say they’ve struggled to attract young, healthy people to balance out claims from sicker customers. Some insurers also have been hurt by expensive patients who sign up outside regular enrollment windows and by government support programs that didn’t deliver promised help.
Aetna chopped its exchange participation down to four states, from 15, in 2016. Bertolini said insurers need, among other things, flexibility to design coverage that draws younger, healthier people into their risk pools to ultimately help make coverage more affordable.
“The stability of these pools continues to deteriorate, and unless there are significant changes, it does not bode well for the program,” he said.
Despite pressure from its ACA business, Aetna trumped fourth-quarter earnings expectations.
The insurer reported earnings, adjusted for one-time gains and costs, of $1.63 per share, as total revenue climbed 4.5 percent to $15.73 billion.
Analysts expected earnings of $1.45 per share on $15.87 billion in revenue, according to Zacks Investment Research.
The company’s profit actually sank 57 percent to $139 million in the quarter, a drop Aetna attributed largely to restructuring costs that included $215 million for a voluntary early retirement program.
The Hartford, Connecticut-based insurer also said Tuesday that it expects to make a decision in the next couple weeks on how to proceed after a federal judge rejected its roughly $34 billion bid to buy rival insurer Humana. Aetna says it is strongly considering an appeal.
Shares of Aetna Inc. rose 67 cents to $117.38 late Tuesday morning, while broader indexes slipped. The insurer’s stock had fallen almost 6 percent since the beginning of the year after topping $136 and reaching a new all-time high late last year.
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report from Washington, D.C.