Humana drops Obamacare to stop balance sheet bleeding
Healthcare | While the Justice Department sues to block health insurance mergers, providers try to cut their Affordable Care Act losses
by Ciera Horton
Posted 7/22/16, 03:54 pm
After nearly $1 billion in losses last year, Humana, one of the nation’s leading health insurance providers, announced Thursday it is pulling out of Obamacare plans in nearly all states.
The announcement came the same day the Obama administration declared it would take legal action against a multi-billion dollar merger between Humana and another top-five health insurance provider, Aetna.
According to Humana, President Barack Obama’s signature healthcare reforms could have a severe effect on the company, resulting in limited revenue and “increasing the company’s medical and operating costs.” Starting in 2017, Humana will provide individual plans in an estimated 156 counties across 11 states, compared to 1,351 counties across 19 states this year.
The news did not come as a surprise, given Humana’s warning earlier this year about pulling out of Obamacare plans due to financial concerns.
Other insurance companies also are suffering financial difficulties. UnitedHealth Group said in April it would pull out of most Obamacare marketplaces in 2017, withdrawing from at least 26 of its prior 34 states. UnitedHealth is the biggest health insurance provider in the United States, and has said it lost $475 million on ACA exchanges last year and could lose $500 million this year.
Both Humana and UnitedHealth have faced difficulties keeping down medical costs for individuals buying coverage through the ACA.
“If you thought it was going to get fixed in a year or two, you’d stick around,” said Robert Laszewksi with Health Policy and Strategy Associates. “The implications of that are that the program just isn’t working in its current form.”
Now Humana’s decision to restrict plans for 2017 could significantly impact consumer plan options on public exchanges.
The announcement from Humana came the same day the Department of Justice filed lawsuits to block two health insurance company mergers—Anthem Inc’s proposed takeover of Cigna and Aetna’s acquisition of Humana.
In a landmark antitrust action, the Justice Department said the multi-billion dollar mergers would reduce competition among insurance companies and raise costs for consumers. Together, both Aetna and Humana would become the largest U.S. controller of healthcare for the elderly.
Aetna vowed “to vigorously defend the companies’ pending merger,” which is worth $37 billion.
“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry,” said Attorney General Loretta Lynch. “They would leave much of the multi trillion-dollar industry in the hands of just three mammoth insurers.”
Lynch said if the “big five became the big three” it would have a severe financial impact for consumers.
But Humana has also said that in states where it remains, Obamacare plan prices may increase as medical costs rise. Consumers might see higher prices and fewer plan options when enrollment for 2017 ACA plans starts on Nov. 1, just one week before the presidential election.
Ciera Horton is a WORLD intern.