- The Washington Times - Tuesday, August 2, 2016

One of the nation’s largest insurers said Tuesday it might exit Obamacare’s web-based exchanges in some states, delivering another blow to President Obama’s signature law in the final months of his tenure.

Aetna’s announcement also included a definite cancellation of earlier plans to expand into more states for the 2017 plan year.

CEO Mark Bertolini said the company had to re-evaluate its participation after a sicker-than-expected pool of exchange customers led to roughly $300 million in losses this year.

“While we are pleased with our overall results, 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,” he told investors.

The Affordable Care Act ushered in a series of changes to the individual market. Most notably, insurers could no longer seek out profits by denying sicker customers. The law forced nearly all Americans to buy coverage, balancing out the insurers’ risk, though fines for flouting the “individual mandate” don’t inflict much pain in Obamacare’s early rounds.

Also, a set of programs designed to mitigate against insurers’ losses in the first three years of Obamacare isn’t paying out as much as participants had hoped.

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The health law requires the administration to make the full payments, but a spending deal that Congress struck at the tail end of 2014 mandated that the program be budget-neutral, so lawmakers won’t be able to rescue insurers who expected payments from better performing plans as they try to get a handle on who’s signing up in the new marketplace.

As a result, analysts expect participating insurers to increase their premiums in 2017 to cover higher-than-anticipated medical costs, while hoping the market stabilizes in the coming years.

Yet some insurers aren’t waiting. UnitedHealth Group plans to withdraw from all but a “handful” of the Obamacare exchanges in 2017, citing a costlier-than-hoped consumer base in the early rounds, and major insurers also have posted losses.

Meanwhile, 16 out an initial 23 nonprofit co-op plans have failed, leading to questions about competition in the exchanges.

The Health and Human Services Department said Tuesday it remains bullish about competition in the Obamacare marketplace, ahead of its fourth round of sign-ups this fall.

“We have full confidence, backed by data, that the Health Insurance Marketplace will continue to thrive for years ahead as a place where insurers compete for business and consumers have access to a range of affordable coverage options,” HHS spokeswoman Marjorie Connolly said.

“In its first year, the ACA nearly doubled the size of the individual market, and the marketplace has continued to grow since then, creating major business opportunities for insurers who serve this market well,” she said. “At the same time, the ACA changed the nature of insurance market competition, from avoiding people with pre-existing conditions to competing on cost and quality. It’s no surprise that insurers are adapting to these changes at different rates.”

Mr. Obama has acknowledged the lack of options for customers in some parts of the country, though, and recently threw his support behind a “public option,” or government-run plan that would compete against corporate players in the exchanges.

Congressional Republicans, meanwhile, say it is time to start over with the type of market-oriented plan that Speaker Paul D. Ryan and his House troops unveiled earlier this summer.

GOP lawmakers seized on Aetna’s decision in a pivotal election year, arguing Obamacare’s woes will only get worse.

“The consequence of this latest exit would be felt particularly hard in Arizona, where residents of Maricopa County would be left with just two health insurance options — down from eight plans offered in 2016,” said Sen. John McCain, Arizona Republican who is seeking re-election this November. “The crumbling of Obamacare at this alarming rate is simply unsustainable.”

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