Aetna, Anthem reassure investors on forecast, exchanges
The Obama administration has been loath to reopen the law with Congress, given that many Republicans vow to repeal it. But the White House has to acknowledge that changes are needed now.
Competitors’ mixed-bag resultsAetna and Anthem are also struggling to make money on the marketplaces, but neither of them appear willing to walk away from Obamacare – at least not yet. That includes exchange coverage.
Aetna Inc. and the Blue Cross-Blue Shield carrier Anthem Inc. each reaffirmed on Friday, November 20, 2015 their 2015 earnings forecasts. Aetna and Anthem had referred back to earlier comments when asked on Thursday about UnitedHealth’s commentary. It has about 815,000 members in plans on the exchanges. Perhaps people who have “qualifying life events” are simply more likely to buy insurance if they need a lot of health care.
There have been other worrying signs.
The company revised its earnings downward Thursday during an investor call, saying losses were largely from participating in the Affordable Care Act.
According to UBS analysts, Aetna said that while it is marking up small losses this year on ACA policies, it expects margins and policies to rise next year. That helped their shares recover a few ground after a rout the previous day. Aetna climbed 4.6 percent, or $4.54, to $104.43. Even UnitedHealth Group Inc. did better than the broader market, rising 2 percent, or $2.31, to $112.99.
Although UnitedHealth provides coverage for about 6 percent of the 9 million people enrolled in ObamaCare (565,000 customers), this could be a bellwether of similar moves from other insurers such as rivals Anthem and Aetna who provide coverage for about 1.6 million people combined.
Aetna said last month that the exchanges remain a good market, even though enrollment fell.
“We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market”, Marilyn Tavenner, CEO of trade group America’s Health Insurance Plans, said in a statement.
Aetna said in a regulatory filing that its individual business had continued to perform in line with its projections through October. “We view it still as a big opportunity”.
Peter Lee, executive director of Covered California, said he spoke with UnitedHealth officials Thursday and remains confident about the company’s continued expansion in the state. “With an average of 10 issuers per state, up from nine last year and eight the year before, statements from any one insurer are not a sign of any trend”.
“It continues to grow, giving more Americans access to quality, affordable health care, and consumers are benefiting from increased choice and competition”, Mr. Wakana said. It’s an administrative nightmare, as millions of individuals will be forced to scramble for new insurers. UnitedHealth, which today cut its 2015 profit forecast, didn’t incorporate payments from the program into its 2015 and 2016 forecast.
“We have every indication they are all in for 2016 and 2017”, Lee said in an interview… “When health plans can not rely on the government to meet its obligations, individuals and families are harmed as a result”.
The risk corridor program works by comparing each insurer’s “allowable costs”-claims plus other allowable expenses – with the insurer’s “target amount” – determined through a formula that subtracts administrative expenses from premiums collected”. Enrollment has been slow so far for 2016 and they don’t see enough improvement on the horizon.