Analyst: Anthem likely to exit many ACA exchanges

Anthem, patent company of Amerigroup Iowa, one of the three insurers that handle Iowa's Medicaid program, is 'leaning toward exiting” many of the areas in which it sells insurance on the Affordable Care Act exchanges, according to Wall Street analysts who met with the company.

The future of the exchanges, where individuals can buy insurance with the help of government subsidies, has been thrown into doubt as companies wait to see whether the Trump administration and Congress will take steps to stabilize the business.

The exchanges already had been challenged, as some insurers had stopped offering plans, leaving about a third of counties with only a single insurer offering plans. Insurers quickly are approaching important deadlines to file to sell insurance in states, and speculation has been rampant about whether the number of choices will drop and premiums will increase.

In Iowa, the three managed-care organizations - Amerigroup, AmeriHealth Caritas Iowa and UnitedHealthcare Plan of the River Valley - have reported losses in the hundreds of millions of dollars.

President Donald Trump has said the exchanges will 'explode,” undermining confidence that the administration will work to fix them.

In its fourth-quarter earnings call, Anthem CEO Joseph Swedish said the company would make decisions on whether to 'surgically extract ourselves from certain rating regions, or quite frankly even on a larger scale, depending on the stability of the marketplace.”

But Jefferies equity analysts David Windley and David Styblo wrote in a research note that after a meeting with a company executive, they believe the company is 'leaning toward exiting a high percentage” of the markets in which it participates, instead of a surgical extraction. They noted that some of the steps the administration already has taken, such as increasing the verification process for special enrollment periods, were 'steps in the right direction, but not enough.”

'Management notes that regulatory advocacy needs to progress significantly in the next ‘month or so,'” the analysts wrote.

Anthem sells insurance in 14 states and has 839,000 members through the exchanges, according to its most recent earnings call.

An Anthem spokeswoman would not say whether the company would continue to participate in the marketplaces.