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Anthem considering big 2018 individual market changes

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Anthem Inc. may slash participation in the individual major medical insurance market in 2018.

Joseph Swedish, the chairman of the Indianapolis-based health insurer, said today that the company will think hard about how it wants to participate in the individual market “toward the end of the first half.” The first half of the year ends June 30.

Related: Aetna to stay out of individual health market in 2018

Swedish talked about the company’s individual health unit during a conference call with securities analysts. The call was organized to discuss fourth-quarter earnings.

Anthem has been a major supporter of the Affordable Care Act public exchange system, and Swedish is now the president of Washington-based America’s Health Insurance Plans. AHIP is a major health insurer trade group.

Swedish said Anthem wants to see how insurance regulators, members of Congress and other policymakers respond to its requests for efforts to stabilize the individual market.

Anthem will look to see how policymakers are making the needed changes “as we approach the end of the first half of this year,” Swedish said. “We will have to make decisions on whether or not we will surgically extract ourselves from certain rating regions, or, quite frankly, even on a larger scale.”

Anthem simply wants to achieve a modest level of profitability on its individual business this year, Swedish said.

“But, if we can’t see stability going into 2018, with respect to the pricing, the products or the overall rules of engagement, then we will begin making some very conscious decisions with respect to extracting ourselves,” Swedish said.

Swedish added: “While the direction in Washington has been positive, we still need certainty about short-term fixes in order to determine the extent of our participation in the individual market in 2018.”

Anthem is also evaluating how it will participate in the ACA public exchange system, Swedish said. The exchange system serves a large fraction of individual coverage holders and a small percentage of the small-group market.

Swedish said he sees some signs that stabilization could occur.

How Anthem did

Anthem as a whole is reporting $368 million in net income for the fourth quarter on $22 billion in revenue, up from $181 million in net income on $20 billion in revenue for the fourth quarter of 2015.

The company ended the year providing or administering health coverage for 40 million people, or 3.4 percent more than it was covering a year earlier.

Medicare plan enrollment fell 0.1 percent, to 1.4 million.

Medicaid plan enrollment rose 10 percent, to 6.5 million.

National group enrollment rose 4.1 percent, to 13 million, and local group enrollment rose 1.2 percent, to 15 million.

The number of people covered by individual policies fell 0.7 percent, to 1.7 million.

Efforts to cut costs helped improve the profitability of most lines, but an increase in medical cost experience hurt the performance of the individual coverage unit, the company says.

About 80 percent of the company’s individual coverage holders have policies that comply fully with the Affordable Care Act rules that took effect in January 2014, and the rest have older, pre-ACA policies, Swedish said.

The mix of 2017 ACA public exchange plan enrollees looks about like what the company had expected, according to John Gallina, Anthem’s chief financial officer. Gallina said one challenge that Anthem saw in the fourth quarter was higher-than-expected costs for enrollees with chronic health problems.


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