Aetna seems to like the individual commercial health insurance market more than it likes the Affordable Care Act exchange system.
The Hartford, Connecticut-based issuer today announced that it will sell coverage through the ACA public exchange system in just 242 in 2017, down from 778 this year. The changes will affect Aetna’s Coventry and Aetna Leap plans as well as Aetna brand plans.
The insurer will return to the individual exchange system in just four states: Delaware, Iowa, Nebraska and Virginia. All of those states use HealthCare.gov, a public exchange enrollment and administration system set up by the U.S. Department of Health and Human Services, to manage exchange enrollment.
But Aetna also said it “will continue to offer an off-public exchange product option for 2017 to consumers in the vast majority of counties where it offered individual exchange products in 2016.
Aetna said it decided to reduce the scope of its ACA individual exchange program in 2017 because the company lost $200 million on individual exchange plans in the second quarter, and has lost about $430 million on the plans since the exchange program came to life in January 2014.
Aetna Chairman Mark Bertolini said in a statement that Aetna is still a strong supporter of the public exchange concept.
Today, however, the average level of health of the people who are using public exchange plans is too poor for the program to work properly, and the health level of the public exchange plan users is getting worse, Bertolini said.
The ACA risk-adjustment program has been doing a poor job of evening out the amount of health risk that the plans in any given market end up handling, Bertolini added.
“The vast majority of players have experienced continued financial stress within their individual public exchange business due to these forces,” Bertolini said.
HHS has been trying to improve the ACA risk-adjustment program, Bertolini noted.
Aetna hopes it can “work with policymakers from both parties” to create a sustainable public exchange system that meets the needs of the uninsured, Bertolini said.
The announcement has no effect on the Aetna exchange plan coverage or other products now in force.
The Affordable Care Act now requires issuers of all new individual major medical policies to sell coverage without taking the applicants’ health status into account, and to price the coverage without considering any factors other than the enrollee’s location, age and use of tobacco products.
Only consumers who buy coverage through the public exchange system can get the ACA premium tax credit subsidies and the ACA cost-sharing reduction subsidies. The subsidies cut out-of-pocket costs sharply for enrollees who earn less than 250 percent of the federal poverty level, but the subsidies provide only a little help for enrollees who earn more than about 300 percent to 400 percent of the federal poverty level. The subsidies provide no help for enrollees who earn more than 400 percent of the federal poverty level.
If Aetna stays in the off-exchange individual health market, it may be able to keep most of the current enrollees who earn more than about 300 percent of the federal poverty level. It is likely to lose most of the enrollees who earn less than that.
Some carriers that compete in the Medicaid plan market say their ACA exchange plan enrollees are healthier than their Medicaid plan enrollees.
Earlier this month, Bertolini complained during a conference call with securities analysts that Aetna has seen hospitals and drug companies making concerted efforts to help patients with expensive health problems get exchange plan coverage.
“We now believe we have third parties paying premiums for special interest groups, both in small group and individual, that are supporting people getting access to these services,” Bertolini said at the time.
Patients and laypeople may see efforts to help sick people pay health insurance premiums as a kind thing to do, but insurers see those efforts as an effort to skew the risk pool in a way that gives insurers extra, unexpected responsibility for medical claim risk, while sharply increasing revenue for doctors, hospitals and drug makers.
By getting out of the exchange market, Aetna may be able to reduce its exposure to low-income people with serious, expensive health problems who are getting help from health care providers with paying their premiums.
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