The third largest insurance company in the U.S., Aetna, will completely exit the Obamacare exchanges in 2018, the company announced yesterday.
Aetna withdrew from all but four of the state exchanges last year and will complete its total withdrawal by the end of next year.
Aetna's withdrawal is just one more sign that the state exchanges are imploding, and it's only a matter of time before the process of disintegration of Obamacare will be irreversible.
The cascade of state-by-state decisions represents a stark turnabout for the nation's third-largest insurer, which initially entered 15 states' marketplaces but last summer decided to slash its 2017 participation to just four. That retreat was the largest by any health insurer from the health-care law's marketplaces, which started in 2014 to provide coverage for people who cannot get affordable health benefits through their employers.But insurers have discovered that their ACA health plans tend to attract too few of the young and healthy customers needed to offset the expense of covering older people with medical problems. Aetna and other insurers have repeatedly reported financial losses on that part of their business.Many insurers, members of the Obama administration and ACA supporters portrayed jumps in premiums as one-time course corrections and predicted that both premiums and insurers' participation would level off. Three months ago, however, Aetna chief executive Mark Bertolini said the marketplaces were in a "death spiral" – an assertion at odds with recent analyses by the Congressional Budget Office.Aetna lost $450 million last year on its nearly 1 million customers with individual health policies on and off the insurance exchanges. In disclosing the final departures Wednesday, spokesman T.J. Crawford said the company expects to lose an additional $200 million for 2017 on its remaining 255,000 ACA customers.Along with "structural issues," Crawford said, "uncertainty that has surrounded the future of the exchanges for some time now ... plays a significant role as well."While affecting only two states, Aetna's announcement quickly set off political reverberations in the charged partisan climate over whether the sprawling 2010 law should be preserved or discarded.
Democrats continue to insist there's nothing really wrong with Obamacare that a few tweaks wouldn't fix. That's total, complete nonsense and flies in the face of the facts. The program has been fatally flawed from the get-go. It was designed to be a money-loser for insurance companies, who swallowed Democrat promises that healthy "young invincibles" would sign up in droves and bail them out when older, sicker consumers took advantage of the subsidies to enroll. This was never going to happen, and many who opposed the law said so.
So now the remaining insurance companies who are still selling plans on the state exchanges are faced with the decision to continue to bleed red ink or cut their losses and wait for the GOP to offer their own fix. Aetna's withdrawal may encourage the GOP Senate to act with more alacrity in coming up with their own replacement for Obamacare. In fact, it may be that Senate Republicans will be forced to act before the private health insurance market is severely damaged.
Meanwhile, Democrats wait anxiously for the next shoe to drop as Obamacare implodes further.