Aetna's exit deals blow to Obamacare, patients
Health insurer Aetna announced late Monday that it is dropping Obamacare insurance in 69% of the counties and 11 of 15 states where it currently offers plans.
The third largest health insurance company becomes the latest to pull back from the plans offered under the Affordable Care Act (ACA) as it cites heavy losses.
Here's what that means for patients, insurers, the ACA and the company's fight with the government over its effort to acquire Humana.
What does this mean for patients?
The cuts affect 20% of Aetna's 838,000 Obamacare participants, covering people in 536 counties, according to a Securities and Exchange Commission filing.
The insurer is ending its Obamacare plans in 11 states: Arizona, Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina and Texas. Participants will be forced to sign up for other Obamacare plans or purchase individual insurance outside of the exchanges once open enrollment begins later this year. Aetna’s Obamacare members in Delaware, Iowa, Nebraska and Virginia will be unaffected.
Patients may also lose their preferred doctors and hospitals if they sign up for plans that don't include those providers in their network coverage. People in rural areas are most affected.
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Will this affect my monthly premium?
Experts are already forecasting that the premium for an average plan – the lowest-cost medium-benefits option for a 40-year-old nonsmoker - is expected to rise by 9% in 2017 to a monthly payment of $281, according to the Kaiser Family Foundation. That increase could potentially deter some people from signing up.
But most Obamacare plan members will continue to receive tax credit subsidies to help pay for their insurance. The U.S. Department of Health and Human Services (HHS) reported that 85% of Obamacare plan members received tax credit subsidies and paid only $4 extra per month in 2016.
The biggest question for insurers is whether premium increases are enough to offset losses and keep insurers competitive.
Why is Aetna exiting a majority of its Obamacare plans?
The insurer blamed heavy losses for the move. The company suggested that too many sick people are buying plans, not enough healthy people are paying premiums to cover the expenses and the government isn't making policy changes to fix it.
But HHS says that it has implemented new regulations to make the exchanges more appealing to insurers. The agency says new rules make it more difficult for Americans to abuse the system by buying insurance when they need it and dropping it when they don't, which is illegal and extremely unprofitable for insurers.
"They did respond to some degree," but insurers are "not satisfied" with the moves, said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation at the University of Michigan, in an interview.
Is what Aetna did legal?
Yes. Insurers are not legally obligated to offer plans through the Affordable Care Act exchanges.
Are others doing it?
Indeed. UnitedHealth Group, the nation's largest insurer, recently ended most of its Obamacare exchanges plans for similar reasons, though its ACA footprint was much smaller. In 2016, states had an average of 6.5 ACA options, down from 6.9 in 2015, according to the Kaiser.
Before Aetna's withdrawal, Kaiser was already projecting a drop to 5.8 ACA insurers per state in 2017.
Who's happy about this?
Conservative advocates who want to demolish Obamacare and replace it.
"Aetna’s withdrawal from nearly a dozen exchanges is another sign that ObamaCare is unsustainable," FreedomWorks CEO Adam Brandon said in a statement. "Conservatives must demand that Republicans begin to make ObamaCare an issue in this election and promote patient-centered solutions that will restore the American health care system."
But liberals who believe Obamacare doesn't go far enough may use this decision to make a point, too.
Udow-Phillips speculated that as insurers withdraw from Obamacare, it could "spark more support for the public option" — meaning, the argument that the best route to ensuring Americans get coverage is to have the government pay for it directly.
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Does this mean fewer people will get Obamacare insurance?
Not necessarily. In fact, Kaiser projected an increase in Obamacare plan enrollees from 12.7 million at the end of open enrollment in 2016 to 16.3 million "if all states improved to at least the average of the 10 best-performing states."
Still, it will be foreboding if more insurers follow suit.
"This is concerning for the stability of the individual marketplace in many places," Udow-Phillips said of Aetna's decision.
Is this payback for the Obama administration's effort to block Aetna's acquisition of Humana?
It depends on whom you ask. Aetna would never say so.
But when the U.S. Justice Department filed a lawsuit seeking to block the merger in July, Aetna warned that the lawsuit could undermine its Obamacare plans. Ironically, the onset of Obamacare helped spark a wave of consolidation in the insurance business.
Could this decision affect the outcome of that fight?
Don't expect tranquility anytime soon.
"I don't think it will sway the Justice Department on their anti-trust concerns," Udow-Phillips said. And "I doubt it would sway the courts."
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.