Aetna Posts $300 Million Obamacare Loss, Warns May Exit Altogether

Tyler Durden's picture

After every other major US health insurance provider already admitted to generating substantial losses on the Affordable Care Act, known as Obamcare, earlier today Aetna became the latest to report that its annual loss on Obamacare plans would be more than $300 million, and said it had scrapped plans to further expand its Obamacare business next year. More ominously, Aetna joined the biggest US health insurer UnitedHealth in reviewing how, if at all, it would continue providing ACA services in the 15 states it's currently in.

The move, coming after a similar shift in tone last week by Anthem, is the latest sign of instability and financial pressures in the marketplaces that are at the heart of the health law. It also confirms that in its current iteration, Obamacare simply does not work and will require a major overhaul by the next administration, one which could lead to even higher premiums for plan participants as well as for subsidy providers, i.e., taxpayers.

Aetna, which had previously expressed relative optimism about the ACA exchanges, said it was setting up a reserve of $65 million to account for expected losses on individual plans over the rest of 2016.  The company also said it no longer expects to reach breakeven in 2016 on individual plans.

“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,” said Aetna Chief Executive Mark T. Bertolini. Aetna had previously made regulatory filings indicating it was considering growing into five new state marketplaces in 2017.

Nobody is getting adequately reimbursed,” unless we start including specialty pharma which current risk adjustment mechanism doesn’t, Bertolini added during the Q2 call, explaining that the risk-adjustment mechanism “a zero sum game."

Aetna's shift represents a significant revision to its previous position on Obamacare. In April, the insurer said that after a loss last year, it was aiming to roughly break even on its exchange business this year and move toward profitability in 2017. Then, Mr. Bertolini called its position in the ACA marketplaces a “good investment.” The five new states in which Aetna was considering expanding were Maine, Oklahoma, New Jersey, Kansas and Indiana.  Not so much anymore: according to Bertolini, "we are evaluating our footprint as it exists today to understand what solutions we can put forward to either fix the business or exit the business.

Surprisingly, despite the poor exchange results, Aetna still posted better-than-expected profit and revenue growth in the second quarter and reaffirmed its 2016 operating earnings guidance.

As the WSJ adds, Aetna’s darkening perspective on the ACA business echoes comments by Anthem, which last week went from projecting a slight profit this year to expecting a mid-single-digit loss on ACA plans. Anthem roughly broke even on individual plans in 2015 and had a positive margin in 2014. Anthem said it expected improvement on its results next year, but also that it would re-examine its full-on commitment to the exchanges. UnitedHealth Group Inc. and Humana have in recent weeks deepened their projected 2016 exchange losses and confirmed they will largely withdraw from the business next year.

In what is likely a shocking revelation for the administration, a big part of the problem, according to S&P analysts, has come from insurers finding that enrollees were running up medical costs greater than they expected when the companies set their premiums. Who would have thought that when presented with a quasi-blank check, the recently uninsured would milk it for all it is worth?

So what happens next?

WSJ predicts that the pullbacks by UnitedHealth and Humana, in addition to Aetna’s possible move, will likely sharply increase the regions with limited or no competition among insurers on the exchanges. That will put a heavy weight on Blue Cross Blue Shield insurers, which in some states, including Alaska, as well as several largely-rural areas of others, are now expected to offer the only ACA marketplace plans. “What you end up with is the not-for-profit Blues and other regional plans becoming the insurer of last resort in parts of the country,” said Sam Glick, a partner with consulting firm Oliver Wyman, a unit of Marsh & McLennan Cos. The situation is “a real concern,” he said, particularly since a number of the Blue insurers are themselves losing money on the exchange business.

In other words, all the negatives of a single-payor system with none of the positives.

What about those states where the ACA services will remain? Why more of the same, which means another year of double-digit increases in premiums.

The punchline? As we reported back in May, most Americans will see the surge in their health insurance premiums on the unfortunate, for Democrats, date: November 1, or just one week before the presidential election. As Politico said: "the last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare."

Then again, what difference will a double digit health insurance price surge make?

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Bryan's picture

It's working as planned.  As soon as Obamaocare becomes widely known as unsustainable, then the government will magically have a one-payer model that miraculously fixes everything.

It's the Leftist/Progressive method.  You thought that just making homosexuality legal and then civil unions was the end goal?  You think that keeping abortion "safe, legal and rare" is the end goal?  You think Common Core is the end goal?  You think female/male "equality" is NOW's end goal?  You think Black "equality" is BLM's end goal?

HelluvaEngineer's picture

I'm a sole proprietor and from what I'm hearing, next year in Georgia PeachCare with its $15k deductible will be the only option. About $1200 a month for the premium and you get nothing for it.  Currently I'm on a short term catastrophic plan, which means I get to pay the IRS penalty.  So....


knukles's picture

The Signature Success for the man's Legacy!

Hey!  Bring the cucumber back here.

Cman5000's picture

You will get nothing and like it. 

Stackers's picture

All according to plan.

Bankrupt insurance companies with plan you know will bankrupt them, then come and save the day with single payer government health care system

WillyGroper's picture

but think of those pensions dependent on sifering 7% returns on insurance.

that bk will reach way beyond healthscare.


RaceToTheBottom's picture

I am sorry, how can there be record profits and bankruptcies at the same time.  Does not make sense.


Is this name taken's picture

You are no more liable to purchase Obamacare than you are to pay the income tax.

HelluvaEngineer's picture

While I know you are right, my wife has this thing about getting SWAT teamed at 3am.  It's tough on our marriage.

Is this name taken's picture

"Condemnation without investigation is the height of ignorance"

Is this name taken's picture

Search for Peter Hendrickson on youtube and you will find several interviews. Google his book "cracking the code", there is a free version floating around. Check out the website listed above. 


They aren't going to swat team you for learning. From my personal experience, they aren't going to swat team you at all, they are going to agree that Pete is right.

VAD's picture

They agreed that Irwin Schiff was right, too.

HelluvaEngineer's picture

Right.  He died chained to a bed.  And he was a Jew.

Is this name taken's picture

So, as an engineer, if the Tacoma Narrows Bridge fails in the wind, do we quit building bridges? Or only suspension bridges?

Or do you look at all the bridges that didn't fail and maybe focus on why that particular one did?

For those who ain't tracking - the tens of thousands of people who file educated returns and pay zero are like the thousands of bridges that don't fall down.

Is this name taken's picture

Not really. Here is text from correspondence that the IRS sent me.

"The carrected forms that you providded 1099-MISC from xxx enabled us to determine your self-employment income for tax year xxxx was reported in error."

The 1099's were exactly the same as many folks here get. The IRS themselves determined that they were reported in error and accepted a return with zero income.


Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened.


Is this name taken's picture

You might even sit down with your wife and watch this:


She might like the idea that her children don't have to be endentured servants for the rest of their lives.



Is this name taken's picture

Or indentured. They may or may not have false teeth.

AustrianJim's picture

Yeah, obviously Obamacare proves the free market can't do it right, and so a single-payer solution is needed. Perfect timing for Hillary to enter the White House, isn't it?

dchang0's picture

Add to that the leftist/progressive plan for gun control. "You think universal background checks is the end goal?" and so on...

Bryan's picture

Exactly, and NAFTA, and NATO, and Carbon Tax, and Kyoto and on and on.  They don't have an end goal.  They are never happy with anything - quite a miserable lot.  Leftists were a lot more quiet when they had to farm and milk and work for a living just to stay alive.  Hard work tends to quell their insatiable appetite for taking over the world.  But alas, now we take money from the hard workers and give it to the Leftists so they can change the world, live high on the hog, and take more money from other people until it runs out -- then they complain that people are not working hard enough. 

wildbad's picture

but but but...


Lady Jessica's picture

When the hope proves illusory, how much change will compensate?

Handful of Dust's picture

"Change you can believe in!"

Hillary did not say a word about Obamacare at the DNC. In fact, NO ONE mentioned it.

Not even a whisper.

It's one of the biggest Failures of this President and Congress.

NoVa's picture

Wait... What...?  Socialism does not improve society?


Vatican_cameo's picture


Isn't it Ironic that the people who really want Socialism are the same people who contribute nothing to Society?

knukles's picture

It's His Legacy Achievement

HelluvaEngineer's picture

I'm amazed they haven't started calling it "TrumpCare".

We've always been at war with Eastasia.

Excursionist's picture

I just wish idiot politicians wouldn't incur a tuition bill measured in hundreds of billions of tax dollars to absorb the concept of "adverse selection."  The ACA of 2010 is irredeemably flawed, but to point this out is to risk being labeled "uncompassionate", "uninformed" and  so forth.

The Duke of New York A No.1's picture

When are you people going to learn; Obamacare has worked exactly as planned: Take from the POOR and give to the RICH.

dchang0's picture

I'd say: Take from the MIDDLE CLASS and give to the POOR AND the RICH.

The Duke of New York A No.1's picture

You mean; from the "disappearing" Middle Class.

redd_green's picture

And make a whoooole lot more of us middle class into poor folk in the process.

SomethingSomethingDarkSide's picture

Nahh, I think the CEO of Aetna wants to not get Scalia'd

wisehiney's picture

ZH party at Mar A Lago November 12.

El Vaquero's picture

Obamacare:  Repealing itself one financial clusterfuck at a time!


I knew this was going to happen when I saw the size of the bill.  What is it?  2700 pages?  And how many tens of thousands of pages of regulations have sprung out of regulatory agencies as a result of that bill?  Naw, that shit's too complex for anybody to reasonably follow it without an army of paid bureaucrats and lawyers.  

Navymugsy's picture

Exit Obamacare? That's been made illegal hasn't it? 

El Vaquero's picture

Not when you own the politicians or are so insolvent that you go out of business.  

Iam_Silverman's picture

"Exit Obamacare? That's been made illegal hasn't it? "

Or, conversely, it's the first step in a long-term plan.  First one, then many large insurers drop ACA coverage.  Next, government steps in and offers coverage at an amazingly low price to entice those on the fence into joining.  Once they get the majority of policies written under a government plan, then the big insurers are squeezed out of their commercial policies and then their last bastion - individual policies.  Only one player left, and that would be Big Gov.  Small steps to end up with a single-payor system just like those in "developed nations" accustomed to socialist rule.

Easy peasy!

SMC's picture

Obummer success.  Everyone else loses.

Hitlary and the DNC for Prison 2016. 

Bill of Rights's picture


redd_green's picture

Mission BOTCHED.  As expected by us, anyway.

scraping_by's picture

Medicare For All with profits. Why doesn't that work?

The insurance companies were supposed to be the bad guys and squeeze the hospitals to get rid of all the useless suits, squeeze big pharma to bring their prices in line with global levels, and squeeze doctors from Beemers to Buicks. If they can't be the heavies, screw 'em.

Though if this is a negotiating ploy, and they're going for the megabuck premiums, screw 'em, too.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Aug 2, 2016 1:41 PM

Obama shuffling off stage left a bit quicker...

USofAzzDownWeGo's picture

Why is the stock green today?

knukles's picture

Because they decided to Get the Fuck Outta Dodge before they Lose MOAR Money in the Boondoggle

The Big Risk here is that the CEO has an underwater nail gun fest with a plugged in toaster stuck up his rectum.  Hancuffed.  Behind his back.

Bay Area Guy's picture

A friend of mine got a notice that the company's premium for his Blue Shield plan was going to increase by 10.2%, so the company shit-canned it, leaving the choice of Kaiser or a company managed plan that was going to have increase its premiums by 22%.

Thank God all this helps the GDP, or we'd really be in deep shit.

SillySalesmanQuestion's picture

The Analcare Corrupt Assreaming isn't working right...get some more Vaseline in there $hitlerly, before they feel it.

Infield_Fly's picture
Infield_Fly (not verified) Aug 2, 2016 1:49 PM

goobmint insured healthcare


here comes the 60% overall tax rates to pay for this shit


line up and die folks - and pay the unions

War Machine's picture

Math is rayciss.