Healthcare IT Interoperability, EHR interoperability, Hospital Interoperability

Private Payers News

Aetna Cancels its Expansion in Health Insurance Exchange

The national payer Aetna has reported facing significant financial losses of up to $300 million when operating through the federal health insurance exchange.

By Vera Gruessner

The national health payer Aetna continues to make headlines in the month of August after the public learned last month about the Department of Justice’s move to block Aetna’s major health insurance merger with Humana. On August 2, Aetna announced that it will be facing losses on the federal health insurance exchange this year and is going to cancel any expansions in this particular market. Additionally, the health payer stated that it will need to re-evaluate its participation on the health insurance exchange, according to the Wall Street Journal.

Health Insurance Merger

The health payer is predicting as much as a $300 million loss from operating on the health insurance exchange as well as the rising cost of medical care. The latest Aetna news shows that the health insurance exchange may have too much instability on a financial platform for health payers to successfully sell plans through this particular market.

Mark T. Bertolini, Chief Executive of Aetna, has stated that the payer will either fix their issues or move forward with exiting the exchanges while also promising that the company will not proceed with its planned expansion into the market.

“ light of updated 2016 projections for our individual products and the significant structural challenges facing the public exchanges, we intend to withdraw all of our 2017 public exchange expansion plans, and are undertaking a complete evaluation of future participation in our current 15-state footprint,” Aetna CEO Mark Bertolini said in a public statement.

If the company were to exit the federal health insurance exchange, it would impact a large number of consumers, as approximately 1.1 million Americans have purchased Aetna health plans through federal and state exchanges. As many as 1 million consumers will need to look toward other means for their healthcare coverage if Aetna drops out of the exchanges next year.

“[We] have full confidence, backed by data, that the Health Insurance Marketplace will continue to thrive for years ahead as a place where insurers compete for business and consumers have access to a range of affordable coverage options,” Marjorie Connolly, Press Secretary at the Department of Health and Human Services, told the news source.

Regardless of this news, the Wall Street Journal stated that Aetna released “better-than-expected profit and revenue growth” in its second quarter 2016 financial results. Additionally, it’s vital to note that Aetna and Humana are seeking to continue fighting the allegations from the Department of Justice and pursue their merger, according to a company press release.

In order to preserve the merger, the health payer is looking to sell $117 million worth of assets to Molina Healthcare Inc. The release stresses how the health insurance merger would benefit seniors seeking more affordable care and describes how the Medicare market has “robust competition” at this point in time.

“A combined company will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers. Aetna and Humana look forward to making this clear in court, where a judge will review the transaction based on its merits,” the Aetna press release stated.

Prior to Aetna’s consideration to move out of the health insurance exchange, the payer was hoping to make a profit in 2017 and expand their participation in the exchanges to five more states, which include Maine, Oklahoma, New Jersey, Kansas and Indiana.

With UnitedHealthcare planning to leave this market and Aetna looking to stop its expansion, other health payers may pay attention to these decisions when it comes to their own operations. The future for the Affordable Care Act’s health insurance exchange will greatly depend upon whether the majority of health payers can remain profitable when selling health plans through this market.


Dig Deeper:

Opposition Increases to Aetna, Anthem Health Insurance Mergers

Aetna, UnitedHealth Take On California’s Medicaid Program


Sign up for our free newsletter:

Our privacy policy

no, thanks

Continue to site...