Why Is Aetna Leaving Most of Its Obamacare Exchanges?

Some theories on why the giant insurer says it will walk away from 70 percent of its Affordable Care Act markets

Brendan McDermid / Reuters
On Tuesday, Aetna, the insurance giant, announced that it would decamp from Affordable Care Act health exchanges in 11 of 15 states in which it currently operates. Citing a $200 million pre-tax loss in the second quarter of 2016, the company says it will walk away from nearly 70 percent of its plans, a move that will leave at least one U.S. county in Arizona without an ACA provider. "As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision," said Aetna CEO Mark Bertolini in a statement.
The development is the latest evidence that, years after its implementation, the Affordable Care Act still represents an unhappy medium between those who want a more robust government-run healthcare system, those who want to cede healthcare to the private sector, and the insurance and medical industries. Texas Senator and failed Republican presidential candidate Ted Cruz, for example, tweeted out the news of Aetna’s decision with the hashtag #FULLREPEAL while Robert Reich, the former Labor Secretary under President Bill Clinton, characterized the development as “the best argument for a single-payer health plan.”
Though Aetna’s decision generally came as a surprise, there were indications that trouble was afoot when Aetna downgraded its expectations earlier this month, adding that it would not expand into five more state exchanges as previously planned. Aetna’s forthcoming withdrawal is the latest blow for the ACA, whose insurers argue that they have been overwhelmed by pools that don’t include enough healthy members to balance out heavier users. “Back when UnitedHealth was the only insurance company bailing out, it was easy to dismiss as just one company trying to boost its bottom line,” wrote Bloomberg’s Max Nisen earlier this month. “But when all five big insurers are bleeding money, it's clear you've got bigger problems.”
Others yet contend that politics are at play in the Aetna decision. Last week, on the heels of Aetna’s announced losses, Massachusetts Senator Elizabeth Warren suggested the company’s threats to reevaulate its involvement in public exchanges had to do with the Department of Justice’s efforts to challenge a merger between Aetna and Humana. “In July, the Justice Department announced that it would sue to block Aetna’s merger with another health insurance company because it would create monopoly-like conditions that reduce competition and drive up insurance costs,” she wrote. “Aetna says this change of tone about the Affordable Care Act has nothing to do with the merger – but some analysts have suggested that Aetna might ‘use its future participation in the exchanges in bargaining over its purchase of Humana.’”
At last month’s Democratic National Convention, many speakers continued to tout the successes of Obamacare, which has delivered insurance to 20 million Americans. According to a Journal of the American Medical Association study released last week, evidence of the ACA’s positive effect has been particularly notable among those living below the poverty level in places like Kentucky and Arkansas, which expanded Medicaid coverage as part of a 2012 Supreme Court ruling, when compared to Texas, which did not. The health of private insurers is a different thing. Nearly twice as many providers are planning to leave public exchanges in 2017 than are planning to join them. That means less coverage and less competition.