Aetna latest insurer to question Obamacare’s future

Aetna is reconsidering its participation in Obamacare, making it the latest large insurer to cast doubts on the future of the individual exchanges.

Aetna (AET) said Tuesday it is canceling plans to expand into five more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges. Aetna — which expects to lose $300 million (pre-tax) on its Obamacare business this year — must conclude its review by the end of September and notify states where it intends to withdraw.

“…in 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,” said CEO Mark Bertolini in a second-quarter earnings statement.

A growing number of insurers on the Obamacare exchanges are voicing concerns about the viability of the program as they run up big losses. Many say that their premiums were too low and didn’t cover the cost of care because their consumers are far sicker than anticipated.

Some 11.1 million people are enrolled in Obamacare this year, according to the latest federal statistics.

UnitedHealthcare (UNH), the nation’s largest insurer, is exiting most Obamacare exchanges in 2017. Humana announced last month that it was pulling out of nearly 1,200 counties in eight states next year. Afterward, it will only be selling insurance on the exchanges in 156 counties in 11 states. Others, including several Blue Cross Blue Shield companies, are also scaling back.

To cover these sicker patients, many insurers are requesting big premium hikes for 2017, some in the high double digit percentages.

Insurers are requesting premium increases of 9%, on average, for the benchmark silver plan — upon which federal subsidies are based — in major cities in 16 states plus the District of Columbia, according to the latest review by the Kaiser Family Foundation. But this masks substantial variation, with requests ranging from a drop of 13% to an increase of 25%. States still have to review the requests and could change them.

Last year, premiums for the benchmark silver plans in these areas increased 2% following the state reviews.

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