On Monday evening, one of the nation’s largest insurers released a statement announcing its intention to stop offering individual coverage in most Obamacare markets. Aetna’s announcement, just six paragraphs long, explained that it had lost more than $430 million on the public exchanges since 2014, thanks largely to too many high-cost (read: sick) enrollees.
Aetna regretted its decision, said CEO Mark Bertolini in the statement, but doing business in the Obamacare marketplaces created “significant sustainability concerns.”
It’s the same complaint other insurers have voiced about Obamacare, and it mirrors what Bertolini said just two weeks ago in a second-quarter earnings call. But earlier this year, Bertolini let slip another figure that didn’t make it into Monday’s six paragraphs: Aetna enjoyed a record $6.5 billion in government program premiums in the first quarter.
In other words, doing business with the government isn’t so bad after all. In fact, it’s gotten especially good since Obamacare came along, thanks largely to the Affordable Care Act’s expansion of Medicaid in most states (but not yet North Carolina.) Medicaid, like Medicare, offers the best of most worlds for insurers – it’s single-payer, government-financed insurance, and it has low enrollee costs. So while insurers like to gripe about the individual Obamacare exchanges, they have no issues with the big Medicaid profits that Obamacare helps provide.
Aetna, at least, seemed to see that big picture not long ago, even calling the Obamacare marketplaces “a good investment” in April. What changed? It could be that last month, the Obama administration blocked Aetna’s proposed $37 billion merger with Humana. On Wednesday, the Huffington Post revealed a July letter from Bertolini to the Justice Department in which he said that if the merger (and its bottom-line benefits) didn’t happen, Aetna would pull out of Obamacare’s exchanges.
Aetna’s about-face, fishy or not, doesn’t change that insurers are legitimately losing money in the Obamacare exchanges. Because of that, those state marketplaces are suddenly wobbly, including in North Carolina, where the loss of Aetna and United Healthcare would leave only Blue Cross and Blue Shield selling ACA policies here in 2017.
That’s troubling, but there are remedies available. Lawmakers could find new ways to give insurers financial relief, including making good on old “risk corridor” promises to cover insurers’ losses on the exchanges. The administration could try to bring more healthy people into the exchanges with tax credits or higher penalties for declining coverage.
The government also could pursue a more radical but perhaps overdue solution of linking the plentiful Medicaid and Medicare Advantage dollars that insurers crave to their participation in the Obamacare exchanges.
Those measures and others would require approval from a Republican-led Congress that hasn’t been inclined to help the Affordable Care Act get better. We hope the 2016 election will change that dynamic, because despite its struggles, Obamacare has done its job of insuring more Americans and slowing the rise of health care costs.
Is it perfect for everyone? No. But for insurers, it’s a lot better than they’d have you believe.