Aetna Inc. (NYSE:AET) did better during the fourth quarter than securities analysts were expecting.
Most of the upside came from a moderate flu season, strong Medicare and Medicaid plan performance, and a modest reduction in the overall level of desolation in the commercial individual health business.
The company, which is in the process of acquiring Humana Inc. (NYSE:HUM), is reporting $321 million in net income for the latest quarter on $15 billion in revenue, compared with $232 million in net income on $15 billion in revenue for the fourth quarter of 2014.
The company ended 2015 providing or administering major medical coverage of all kinds for 24 million people, or about as many as it was covering a year earlier.
Commercial plan enrollment fell to 19.4 million, from 19.8 million.
Medicaid enrollment increased to 2.3 million, from 2.1 million.
Medicare Advantage enrollment rose to 1.3 million, from 1.1 million.
Medicare supplement enrollment jumped to 566,000, from 462,000.
- Executives described overall commercial group health pricing as competitive but rational.
Shawn Guertin, the chief financial and enterprise risk officer, talked about the company’s strong Medicaid performance and improving Medicare margins. He briefly alluded to the potentially volatile nature of the government plan business when he referred to the “Kentucky Medicaid rate reset.”
Mark Bertolini, Aetna’s chairman, talked about Aetna achieving its targeted Medicare Advantage operating margin one year ahead of schedule while exiting a Medicaid contract in Delaware and facing headwinds in PPACA-related businesses.
For a look at more about what Aetna executives said about their commercial business, read on.
1. The PPACA exchange business might be somewhat less hideous.
Aetna executives said they expect to have about 1 million individual major medical enrollees this year.
The company is hoping the 2016 individual health loss margin will narrow to about 3 percent to 4 percent, from a “mid-single digit loss” for 2015, executives said.
But Bertolini expressed the same unhappiness with HHS communications, exchange program rule changes, and enrollment rule enforcement that executives at other big carriers have expressed in recent weeks.
“We continue to have serious concerns about the sustainability of the public exchanges,” he said.
Aetna will continue to work with HHS and lawmakers to try to make the exchange program more sustainable, Bertolini said. Otherwise, he said, the government may end up with an exchange program that looks like a “Medicaid plus” program for people with health problems and the working poor.