Aetna Leaving All but Four Exchanges

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Aetna announced it will no longer offer plans in 2017 on 11 of the 15 Exchanges where it currently operates.  The decision follows similar moves by UnitedHealth Group and Humana.  Aetna will continue to offer Exchange plans in Delaware, Iowa, Nebraska and Virginia.

With total pretax losses of more than $430 million since January 2014 in the individual market, Aetna said the Exchanges need to attract larger numbers of healthy individuals and the Affordable Care Act’s (ACA) risk adjustment program is insufficient to offset the costs of the less healthy ones.

The risk adjustment program is the only permanent program under the ACA that was intended to offset losses by issuers taking on higher-risk populations.  Payments are transferred from issuers with relatively lower-risk populations to issuers with relatively higher-risk populations.

The program has its critics with some saying it favors larger issuers at the expense of smaller or newer ones.  The Centers for Medicare and Medicaid Services has proposed some changes and is considering additional changes to the risk adjustment program to address these concerns.

Some speculate Aetna’s announcement may partly be in response to the Department of Justice’s (DOJ) suit to block its acquisition of Humana.  The DOJ complaint filed in July 2016 asserts that Aetna and Humana have been very active on the Exchanges and a merger would eliminate competition in some markets.