Aetna has withdrawn from the public health exchange in New York as it has with other exchanges earlier this summer in Connecticut, Georgia, Maryland and Ohio.
“On New York, as a result of our analysis, we reluctantly came to the conclusion to withdraw the Aetna individual exchange filings for 2014,” Aetna spokeswoman Cynthia Michener said in a prepared statement.
“This was not a step taken lightly. We recognize there are many unknowns for all of us in this environment and we sincerely appreciate all of the hard work the exchange team and [New York state] regulatory agencies are putting into making ‘NY State of Health’ a success,” she said.
Aetna’s decision was apparent when the NY State of Health, the exchange in New York, announced on Aug. 20 a list of 16 health insurers offering health plans on the exchange for coverage next year. Aetna was not on the list, but the company had submitted paperwork early this year showing an interest in participating.
Shortly after Aetna filed that paperwork, however, it completed its acquisition of Coventry Health Care Inc.
“Aetna has continued to assess its overall business strategy since then, as the acquisition has had a significant impact on Aetna’s larger business priorities,” Michener said. “Our goal for 2014 is to participate in a limited number of state exchanges where we can be competitive and add the most value to the market.”
In a July 30 conference call to discuss second-quarter earnings, Aetna CEO Mark T. Bertolini told analysts, “We continue to take a cautious approach to our participation in the public exchanges as we evaluate the longer term viability of these marketplaces.”
In Connecticut, Aetna pulled out of the exchange after regulators at the state Insurance Department told Aetna its prices were too high for the plans it wanted to offer on the exchange, Access Health CT. In response, Aetna said lower rates would not allow the insurer to collect enough premiums to cover the cost of the plans and meet the service expectations of its customers.
Aetna has said it will participate in public health exchanges in as many as 15 states, but nothing is final until the Hartford insurer signs contracts with the exchanges in the next few weeks, Michener said. It wasn’t clear Wednesday which state exchanges will have Aetna health plans.
Public health exchanges are online marketplaces established by the Affordable Care Act passed by Congress in 2010. People who don’t already have health insurance through an employer or some government-sponsored plan, such as Medicare, can buy coverage starting Oct. 1 for next year.
The Hartford health insurer also is withdrawing its application to offer individual health plans through Maryland’s health exchange, though Aetna said it will continue to offer small-group plans on the exchange because Maryland requires its participation. Aetna also pulled out of Georgia’s exchange entirely. Coventry will offer plans in Ohio, while Aetna has pulled out of that state.
State health exchanges are gearing up for the start of enrollment on Oct. 1, though some insurers are taking a wait-and-see attitude.
“Maybe Aetna is using this to try to negotiate a better entry rate for their products. Maybe they simply don’t want to participate in the exchange,” said John Aloysius Cogan Jr., associate professor at the University of Connecticut School of Law and former executive counsel for the Rhode Island Office of the Health Insurance Commissioner.
“More than a few large companies are not participating in the exchanges nationwide,” Cogan said. “I think there’s a fair amount of uncertainty as to how things are going to work going forward.”
Theoretically, an exchange is still competitive so long as it has at least two competitors. In Connecticut, three insurers are competing for individual customers: Anthem Blue Cross and Blue Shield in Connecticut, ConnectiCare and HealthyCT. Three insurers are competing for small-group business: Anthem, HealthyCT and UnitedHealthcare.
For those insurers waiting to see if the exchange becomes a high-risk pool of sick people, or a viable market, the wait could be long.
“I don’t know that a year is going to be enough for insurance companies to see how things work out on the claims side because there’s a long enough tail on health insurance claims that it’s going to take a couple of years before everybody has a good idea what actually happens the first year,” Cogan said.