Citing over $600 million in losses and the lack of a federal safety net for the Affordable Care Act's high risk pool, Aetna is exiting the exchange market in all but four states, Chairman and CEO Mark Bertolini said Monday.
Aetna will reduce its participation in the exchange market from 15 to four states in the 2017 plan year, maintaining an on-exchange presence in Delaware, Iowa, Nebraska and Virginia, the insurer said.
The company's decision follows similar announcements by UnitedHealth and Humana, and the closure of 16 out of 23 non-profit co-ops set up under the Affordable Care Act.
It comes ahead of a December 5 court battle against the Department of Justice's decision to block its planned $37 billion merger with Humana.
Yet Aetna indicated its decision is not ground-breaking, saying more than 40 payers of various sizes have similarly chosen to stop selling plans in more than 30 states in the 2015 and 2016 plan years.
Bertolini blamed the company's losses and its inability to offer an affordable product on the federal government's lack of proper risk adjustments to help insurers serve a high risk pool.
There is no current federal risk adjustment mechanism to help with the substantial upward pressure on premiums, he said.
"Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward," Bertolini said in a statement. "Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool."
More than half, 55 percent, of Aetna's individual on-exchange membership in 2016 was new, he said. During the second quarter, individuals in need of high-cost care represented an even larger share of Aetna's exchange population, he said.
Bertolini said Aetna would reevaluate its decision if the Department of Health and Human Services modified the risk adjustment program.
"We will continue to evaluate our participation in individual public exchanges while gaining additional insight from the counties where we will maintain our presence," he said, "and may expand our footprint in the future should there be meaningful exchange-related policy improvements."