Aetna is canceling its plans to join the Affordable Care Act’s health insurance marketplace in Maine after spending months preparing to compete against three other insurers in offering subsidized benefits.
In May, Aetna had filed paperwork with the state to join Anthem, Community Health Options and Harvard Pilgrim in the ACA marketplace, but on Aug. 5 the company filed a notice with the Maine Bureau of Insurance canceling its plans. Aetna will still offer individual plans outside the marketplace.
About 84,000 Mainers have individual marketplace coverage, according to insurance filings.
The decision is part of Aetna’s national strategy to pull back from the ACA marketplace for financial reasons, according to Mark Bertolini, the company’s chairman and CEO, in a transcript of an Aug. 2 conference call with analysts that was provided to the Portland Press Herald.
“We are committed to being good stewards of our balance sheet and managing the financial risk and level of investment associated with this opportunity,” Bertolini said. “In light of the disappointing year to date performance … we believe it is only prudent to reassess our level of participation on the public (marketplace).”
The decision comes on the heels of UnitedHealth Group’s move in April to abandon the ACA marketplace in most of the 34 states in which the insurer was operating. UnitedHealth does not offer marketplace plans in Maine.
Sandy Ahn, an associate professor at Georgetown University’s Center on Health Insurance Reforms, said she doesn’t see the decisions to scale back as a sign that insurers will stampede away from offering ACA marketplace coverage.
“This is just part of the growing pains of establishing the program. We’re only in year four,” said Ahn, pointing out that most consumers still have several choices among insurance companies. Ahn said other government programs that proved to be successful had similar problems at the outset, such as the Medicare prescription program from the early 2000s.
Aetna had planned on expanding in Maine, New Jersey, Oklahoma, Indiana and Kansas, according to The Wall Street Journal. The company will also re-evaluate whether to continue offering marketplace plans in the 15 states where it already operates, Bertolini said.
Patients in the ACA marketplace can on average choose among 5.8 insurance companies, down from 6.9 in 2015 and 6.5 in 2016, according to a study of marketplace offerings in 17 states by the Kaiser Family Foundation.
Emily Brostek, executive director of Consumers for Affordable Health Care, an Augusta-based health advocacy group, said she doesn’t see the decisions by Aetna and UnitedHealth as a severe problem for the ACA, but it’s a reflection of how difficult it was to predict how much it would cost to cover people, many of whom never had health insurance.
“It’s a trickier needle to thread than some companies expected,” Brostek said.
She said that while insurance companies had decades of knowledge about the patient pool in existing employer-based networks, predicting the patient pool in the ACA, often from self-employed or part-time workers who never had health insurance, proved to be far more difficult.
As a result, insurance companies suffered losses in 2015 and have requested double-digit premium increases for 2017 in filings with the Maine Bureau of Insurance. The requests include a 25.5 percent increase by Community Health Options, 21.1 percent by Harvard Pilgrim and 19.4 percent by Anthem.
Those requested increases are under state review and may be reduced.
For about 90 percent of patients who qualify for subsidies, the premium increases will be absorbed by the subsidies and not borne by the patients. However, people who don’t qualify for subsidies will have to pay the full increase.
Incorrect projections regarding the health of the patient population was a major factor in the financial woes reported by Community Health Options, the co-op established in Maine and other states with a federal loan as part of the ACA.
CHO is currently being monitored by the Maine Bureau of Insurance, although its financial performance is on track with expectations, according to bureau filings.
CHO is also suing the federal government for $22.9 million under a program designed under the ACA to protect insurers from losses caused by faulty estimates. CHO lost $31 million in 2015 and has set aside $43 million in reserves for 2016 to absorb losses.
Anthem, in a filing with the state on Aug. 5, said that the 19.4 percent rate increase it requested should not be reduced, due to the ripple effect of Aetna’s pulling out of the marketplace.
Aetna’s withdrawal “materially increases” Anthem’s financial risk for a number of reasons, including that Anthem is “likely to receive significantly greater enrollment than contemplated in its rates,” according to Anthem attorney Christopher Roach.
The insurance bureau will likely finalize rates this week, although they must also be approved by the federal government. Patients can sign up for 2017 marketplace insurance plans starting on Nov. 1.
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