Aetna says losses not over for ACA plans

Insurer might return to health exchanges in 2019

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U.S. health insurer Aetna Inc warned on Thursday that losses from its Affordable Care Act individual insurance plans will likely continue despite pulling out of the exchanges in most states, creating uncertainty for next year’s earnings.

Chief Executive Officer Mark Bertolini said the earliest the health insurer might return to the exchanges is 2019, more likely 2020, and then only if operations improve.

The CEO’s comments came during a conference call to discuss third-quarter earnings and revenue, both of which beat analysts’ expectations.

Aetna said in August it will reduce participation in individual insurance on government-run online marketplaces to four states from the current 15 states due to financial losses. It will continue to sell plans on the exchanges.

Bertolini’s comments came two days after the U.S. government said premium rates for ACA plans would increase by 25 percent, on average, in 2017, reflecting higher medical costs of insuring members.

Bertolini said two problems are the risk adjustment calculation that smooths out the costs of sick patients and the number of people enrolled in the program.

“Until that mechanism changes, or until the pool substantively changes, we’re going to find ourselves in a premium spiral that’s going to continue to drive rates up,” Bertolini said.

The government estimates 2017 enrollment to rise 1 million about 11.4 million people.

Aetna said it expects operating losses of $350 million on the individual insurance business in 2016. In 2017, it may book losses both in the states where it remains in exchanges and in the states where it sells plan outside the exchanges.

Bertolini said Aetna, which is fighting a U.S. government lawsuit to block its $34 billion acquisition of Humana, is committed to the deal and expects to close in 2017.

The exchanges and the lawsuit are two uncertainties for 2017, Aetna said. Other potential bumps include high costs in its fully insured plans for small companies and the possible loss of some Medicaid contracts.

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