Aetna executives were kinder to the Affordable Care Act public exchange system and market rules in the first quarter than executives at some of the company’s competitors.
Mark Bertolini, chairman of the Hartford, Connecticut-based company, said improving and saving the ACA exchange system would be a good investment, and that the existence online health insurance supermarket had helped the insurer jump into markets cheaply and quickly.
That was then.
Now, the Obama’s U.S. Department of Justice has sued to block Aetna’s efforts to acquire Louisville, Kentucky-based Humana.
Aetna is not yet talking directly about shutting down most or all of its public exchange operation, but today, during a conference call the company’s executives held to discuss second-quarter earnings with securities analysts, the executives repeatedly said the company had done well during the quarter in spite of the ACA exchange operation and the performance of its fully ACA-compliant small-group business. They implied that major changes in the exchange operation may be coming.
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The company is reporting $793 million in net income for the quarter on $16 billion in revenue, compared with $732 million in net income on $15 billion in revenue for the second quarter of 2015.
The company ended the quarter providing or administering health coverage for 23 million people, down from 23.7 million people a year earlier.
But the company let insured commercial enrollment shrink to 5.7 million, from 6.2 million. The growth came from Medicare and Medicaid. About 838,000 of the commercial enrollees were ACA exchange enrollees.
The individual products arm suffered a $200 million pretax operating loss for the quarter, and the company has already set up a $65 million premium deficiency reserve for the second half of the year, to compensate for what the company believes to be baked-in underpricing.
For a look at some of what Aetna’s executives said during the conference call about the ACA insurance operations, and what that might mean for the future of the ACA, read on:
Earlier, Aetna had applied to put its plans on the menu in more states. (Image: Thinkstock)
1. The 2017 exchange plan menus might be shorter than they looked a few weeks ago.
In light of the disappointing exchange program performance, “combined with the significant structural challenges facing the public exchanges, we believe it is only prudent to reassess our level of participation on the public exchanges,” Bertolini said during the conference call. “Our initial action will be to withdraw our 2017 public exchange expansion plans. Additionally, given the deadline to attest to our final rate filings for 2017, we are also undertaking a complete evaluation of our current exchange footprint, as the poor performance of these products warrants such an analysis.”