Bloomberg reports on some very disappointing news:
Health insurer Aetna Inc. will stop selling individual Obamacare plans next year in 11 of the 15 states where it had been participating in the program, joining other major insurers that have pulled out of the government-run markets in the face of mounting losses.
Aetna will exit markets including North Carolina, Pennsylvania and Florida, and keep selling plans on state exchanges only in Iowa, Delaware, Nebraska and Virginia, according to a statement Monday evening. In most areas it’s exiting, Aetna will offer individual coverage outside of the program’s exchanges.
Humana, United and now Aetna are all significantly backing out of the exchanges.
The big issue is that there will be quite a few counties where there is now only a single insurer offering coverage. And given the late date of the withdrawal, very few incumbent insurers can re-jigger their offerings to allow for a Silver Gap strategy to maximize the advanced premium tax credit revenue and decrease the subsidized out of pocket expense. So less competition and an inferior array of offerings is on the menu in affected counties for 2017.
Long run this is a challenge. If we are to use a market like mechanism, we need carriers to be willing to offer plans on Exchange. Or we need a public option. In the shorter run, this could help some of the smaller insurers (although they might have risk based capital problems) as risk adjustment is getting a whole lot easier to project in single carrier regions and highly sophisticated data operations are getting out of the segment in some areas.
Overall, this is not good news.