Aetna returns to the ACA exchanges

CVS bought Aetna a few years ago. Over the past few years, Aetna has barely been on the ACA markets. They left most markets for the start of the 2017 plan year. CVS announced that they are making a full return to the ACA markets for 2022 via the Wall Street Journal:

CVS Health Corp. said it would re-enter the Affordable Care Act insurance marketplaces next year, as its major role in Covid-19 testing and vaccination allows it to forge ties to a growing number of consumers.

THIS IS INTERESTING…..

In August 2016, I thought Aetna was being cynical as hell in trying to leverage the Obama Administration to get their merger with Humana approved. They pulled out of profitable states including Pennsylvania:

Aetna was profitable in 2015 in the individual market in Pennsylvania. It is projecting to be profitable in 2017. The filing memo was drafted in late May and submitted to the Pennsylvania regulators in early June. Conditions have not changed enough to make Pennsylvania a money loser in under two months.

My wee bit of cynicism bears fruit. Aetna is trying to logroll an anti-competetive merger with on-Exchange political consequences. If it works for Aetna/Humana it burns a bridge to get the merger, and if it fails, it puts Aetna on the shitlist of any Democratic administration. That is a very interesting strategy when it is highly likely that there will be another Democratic administration.

Gross premiums spiked in 2017 and 2018. The number of counties with only a single insurer spiked as well. Part of this was a lot of the incompetents either left the market or were liquidated. Another significant chunk of the 2017 price spike was a one-off change in premium levels as federal reinsurance went away after 2016. And a lot of the 2018 price spike and competition fleeing was due to policy uncertainty. No insurer, when they had to price their plans had a clue what the rules would be or if there would even be a market in 2018. In that situation, insurers either run or jack up rates.

Aetna’s decision to try to leverage the Obama DOJ directly contributed to this policy environment. A profitable insurer in at least some states should have been able to reduce the number of either true monopolies or de facto monopolies in 2018. This would have kept down premiums. More speculative political impacts are plausible as well.

So Aetna is coming back into the marketplaces for 2022 as the policy and political environment is stable due to the combination of price-linked subsidies and silverloading. This is likely to bring down gross premiums, but higher degrees of competition are likely to raise most peoples’ net premiums.