Why Health Insurers Aren’t About To Pull Out Of Obamacare



On Wednesday, Aetna CEO Mark Bertolini told CNBC that the nation’s third largest insurance company may stop offering coverage in the Affordable Care Act’s new health care marketplaces if the law does not attract more uninsured enrollees. Of the 2.2 million individuals who enrolled in coverage from October to December, estimates suggest that 11 percent were previously without insurance, while the majority shifted from other sources of coverage.

“Our big question is, May 15 we have to submit rates for 2015. Are they going to be double-digit [increases] or are we going to get beat up because they’re double-digit or are we just going to have to pull out of the program?” Bertolini asked in a Squawk Box interview. “Those questions can’t be answered until we see the population we have today. And we really don’t have a good view on that.” Watch it:

But fears of insurers abandoning Obamacare are alarmist, if not wholly unwarranted. The uninsured have until March 31 to sign-up for coverage and as Bertolini himself admitted, it’s currently “too early” to know what kind of costumers the company will attract. “We don’t have data on who enrolled, where they enrolled, how old are they, what kind of comorbidities do they have and so until we get data on the individuals it’s a little premature to raise the earnings title,” he told CNBC, adding that the law represents a very small part of Aetna’s business.

Kaiser Health News reported in June that Aetna and some other large insurers have proceeded cautiously in the online marketplaces, “evaluating markets state by state and in some cases region by region within the state to assess the viability of all the different pieces.” Companies are adopting a wait-and-see approach to avoid taking on sicker enrollees who are initially more motivated to sign up for coverage, but seek to participate in the market in the future.

“We have not increased our exposure, but we have put down an option to play in the marketplace and to learn because we believe…public exchanges will be much larger in the marketplace in the long term,” Bertolini told investors on Dec. 12. “They are not going away. They are here to stay. We need to figure out on how to play in them, and this option that we’ve put down this year is our way to learn and to find opportunity in the public exchange market going forward.” He admitted that enrollment is currently “lower than everybody expected” but stressed, “my view is that by 2015, if we get it fixed right, it will be a new start, and 5 years from now, nobody will remember it.”

Bertolini, and many other insurers, were even more bullish during the JP Morgan health care conference in January, telling the audience “I’m not alarmed [by the demographics of the current enrollees]. They’re better than I thought they would have been.”

Though Affordable Care Act plans only make up 3 percent of Aetna’s revenue, Bertolini stressed that in the long term, “We believe there will be 25 million members on public exchanges and $75 billion in premium.” “[I]t’s not the marketplace we can ignore. And we are participating to play in a retail market, which includes public exchanges and private exchanges. We believe that’s the model of the future. We want to drive our retail market in the future and so our participation is important.”

Aetna recently raised its revenue projects for 2014 by a billion dollars — from $53 billion to at least $54 billion — citing its success in attracting more enrollees into Medicare Advantage.