HARTFORD, Conn. — Aetna announced this week that it's scaling back its participation in Obamacare by more than two-thirds as it seeks to cut its financial losses.
The Hartford-based health insurer said Monday night it will reduce its participation in health care exchanges next year to 242 counties from 778. The company said it took a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since 2014 in individual plans.
Mark Bertolini, chairman and chief executive officer, said the problem is due to inadequate pooling of risk.
"Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool," he said.
Aetna's announcement comes as the insurer is locked in a battle with the U.S. Department of Justice over its effort to acquire Humana for $37 billion. The department sued to block the deal and a trial is scheduled to begin Dec. 5.
Fifty-five percent of Aetna's individual exchange membership is new this year, and in the second quarter, individuals requiring high-cost care represented an even larger share of the insurer's policies, the company said.
"This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns," he said.
Bertolini said he's encouraged that federal health officials have pledged to consider "new options to modify the risk adjustment program."
Aetna regrets "having to make this decision" because it supports public exchanges to insure the uninsured, he said.
The announcement was not a surprise. Bertolini told investor analysts when Aetna released its second-quarter financial results Aug. 2 that the insurer would withdraw expansion plans for Affordable Care Act exchanges in 2017 and that it expected a loss of more than $300 million in Affordable Care Act business this year. Aetna previously said it was a break-even operation.
Aetna was evaluating its choices to "either fix the business or exit the business," Bertolini said then.
UnitedHealth Group, the nation's biggest health insurer, announced in April it will cut its participation in public health insurance exchanges to a few states next year after expanding to nearly three dozen for this year. It said it expects to lose $650 million this year on its exchange business, up from its previous projection for $525 million.
The U.S. Department of Health and Human Services has said the Affordable Care Act changed the insurance market competition from avoiding patients with pre-existing conditions to competing on cost and quality. As a result, insurers are being forced to adapt to the changes at different rates.
Aetna said it is maintaining a presence in health care exchanges in Delaware, Iowa, Nebraska and Virginia, and will offer private health care insurance for 2017 to consumers in the "vast majority" of counties where it offered public exchange policies this year.
Aetna held open the possibility it will expand if "meaningful exchange-related policy improvements" are made.