One of America’s biggest health insurers, Aetna, made an announcement on August 15 that it will stop its operations in almost 70 percent of counties where it presently provides coverage under Obamacare. According to the firm, it arrived at this decision after it reviewed its business of public health exchange and found that it suffered a pre-tax loss of almost $200 million every year by continuing its business. This loss is not sustainable and not worth the commercial effort.
Aetna already has a new plan. It will provide a number of healthcare options via public exchanges in only 242 of the total 778 counties where it presently runs its operations. The company will continue to do business in Delaware, Virginia, Iowa and Nebraska. It also announced of a review as part of the company’s call on second quarter earnings on August 3.
According to Mark Bertolini, the CEO of Aetna, offering premium and affordable health care options to its consumers is impossible sans any balanced risk pool. He said that 55 percent of the individual and on-exchange membership can be regarded as new- as they were enrolled in 2016. The company also regards individuals who require high cost care as a major share of the on-exchange population. The CEO added that this particular population dynamic, when combined with the present mechanism of inadequate risk management, results in the substantial upward pressure put on premiums. This creates considerable sustainability concerns.
Aetna is not alone in its concerns regarding the exchanges. Another company, UnitedHealthcare, has also announced of its intention to substantially reduce footprint in the exchanges. A number of companies have said patients who visit the exchanges are older. They are thus more expensive to cover. There are an insubstantial number of young individuals to balance the costs.
For Aetna, it is trying for a long time to merge with Humana, its rival. Its plans, however, are derailed by Department of Justice when it filed a lawsuit. It was done in July to block this proposed merger. Aetna for its part has said that it remains fully committed to the healthcare marketplace which offers every US resident the opportunity to enjoy high quality and affordable care. It announced the intention to continue its participation in the individual public exchanges and gain more insights from counties, where its presence will be maintained. It also said of its wish to expand its footprint in future on the condition of exchange linked policy improvements.