Aetna (AET) said Tuesday it is canceling plans to expand into more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges. It expects to lose $300 million (pre-tax) on its Obamacare business this year.
"...in light of updated 2016 projections for our individual products and the significant structural challenges facing the public exchanges, we intend to withdraw all of our 2017 public exchange expansion plans, and are undertaking a complete evaluation of future participation in our current 15-state footprint," said CEO Mark Bertolini in a second-quarter earnings statement.
he performance of Aetna's Obamacare business is deteriorating as policyholders seek more care than expected, the company said. Pharmacy costs are a particular problem.
Aetna had 838,000 exchange customers at the end of June.
The announcement comes two weeks after the Department of Justice blocked Aetna's merger plans with Humana (HUM), as well as Anthem's purchase of Cigna (CI). Anthem (ANTX) last week linked its merger with its Obamacare participation.
"Our acquisition of Cigna will help stabilize pricing in this volatile market, enabling Anthem to continue its commitment to the public exchanges, and provide the opportunity to expand our participation to nine additional states, where neither Anthem nor Cigna currently participate," said Anthem CEO Joseph Swedish in an earnings call.