Humana to quit Obamacare exchanges in 2018, providing fuel for Trump's 'repeal' efforts

Humana to quit Obamacare exchanges in 2018, providing fuel for Trump's 'repeal' efforts
Humana to quit Obamacare exchanges in 2018, providing fuel for Trump's 'repeal' efforts

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While Republicans continue to grapple with plans to repeal and replace Obamacare and stabilize health insurance rates, Humana is the first major insurer to say it is dropping out of the individual market for 2018.

"Based on our initial analysis of data associated with the company's health-care exchange membership following the 2017 open enrollment period, we continue to see further signs of an unbalanced risk pool," said Humana CEO Bruce Broussard, on a conference call with analysts Tuesday. "Therefore, the company has decided that it cannot continue to offer this coverage for 2018."

In the wake of the news, President Donald Trump tweeted that the insurer's decision was another example of the failure of the Affordable Care Act, and he reiterated his plan to "repeal, replace & save healthcare for ALL Americans."

The health insurer made the announcement with its earnings update, following the mutual termination of its $34 billion merger agreement with Aetna earlier in the day. The two insurers agreed to part ways, after a federal court judge blocked the deal on antitrust grounds.

Humana now expects to earn $10.80 to $11.00 per share for 2017, excluding anticipated losses on its exchange business.

Humana cut back its Affordable Care Act exchange participation to 11 states last July, when the Department Of Justice sued to block its deal with Aetna. The insurer said that despite efforts to mitigate losses on its exchange plans in 2017 through narrower networks and selective market participation, it is seeing early signs of high pharmacy utilization among its new members.

Right now, the insurer estimated that it will lose a modest $45 million on ACA exchange plans, but it cautioned that this is an early estimate and "a number… that we're going to have to evaluate."

Other health insurers have threatened to pull out of the individual market if there is no clarity from Capitol Hill or Trump's health officials on stabilizing the markets, but Humana is the first to say that it will pull out altogether.

Leading up to 2017 open enrollment, the exchange markets experienced tremendous turbulence last year, after most major insurers, including Humana, cut back on participation after suffering big losses on exchange plans.

Humana is a leading Medicare Advantage plan provider, and executives said that they don't believe that they can achieve the same kind of health-care models on the Obamacare exchanges that they achieve with health plans for seniors.

The company does not hold out hope for more detail on Republican "repeal and replace" plans in the near term.

"We're really feeling that this organization needs to stay focused on what we do well," Broussard said, and the company can't do that with Obamacare plans. "I think with that particular program, the way it is designed today and most likely the way it is designed in the future, will limit our ability… to get back into that marketplace."

CNBC

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