NEW YORK (CNNMoney) — Aetna is reconsidering its participation in Obamacare, making it the latest large insurer to cast doubts on the future of the individual exchanges.
Aetna said Tuesday it is canceling plans to expand into more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges. It expects to lose $300 million (pre-tax) on its Obamacare business this year.
“…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, the nation’s largest insurer, is exiting most Obamacare exchanges in 2017. Others, including several Blue Cross Blue Shield companies, are also scaling back. And more than half of the co-op insurers, created and funded by the health reform law, have failed.
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.
The performance of Aetna’s Obamacare business is deteriorating as policyholders seek more care than expected, the company said. Pharmacy costs are a particular problem.
Aetna had 838,000 exchange customers at the end of June.
The announcement comes two weeks after the Department of Justice blocked Aetna’s merger plans with Humana, as well as Anthem’s purchase of Cigna. Anthem last week linked its merger with its Obamacare participation.
“Our acquisition of Cigna will help stabilize pricing in this volatile market, enabling Anthem to continue its commitment to the public exchanges, and provide the opportunity to expand our participation to nine additional states, where neither Anthem nor Cigna currently participate,” said Anthem CEO Joseph Swedish in an earnings call.