In what came as no surprise to the insurance world, Aetna announced it is losing money in its individual exchange business. This comes on the heels of both UnitedHealthcare and Anthem Blue Cross announcing they had lost money in this segment. As we have chronicled in the past, the exchanges are enrolling fewer people than originally assumed (partly due to higher enrollment in employer plans), and an older group of enrollees. Aetna tracks enrollees and reports on member medical costs, specifically noting if their pharmacy spending is higher than average.
The ultimate question is the long-term sustainability of the exchanges as a tug of war looms between the HHS and the insurers. Carriers have already exited some markets, and in the ones that they remain, they are restricting access through smaller provider networks. HHS is addressing consumer complaints about access issues and is due to issue new regulations concerning appropriate access. This is sure to negatively impact the insurers. With a direct correlation between access and cost, one would assume that if the insurers need to broaden their networks, then it will mean additional costs.
Since this market segment is so small to the large national insurers and their overall businesses are healthy, no one is feeling sorry for them. With the disaster of the co-ops and the continued prospect of losing money, one wonders what the future holds for product availability in this market. When does everyone fold up their tent and go home? For what was seemingly a good idea – though severely flawed in its application – the exchanges are going to need to regroup. Instituting some of the measures advised by the industry in the first place such as stringent enrollment protocols, waiting periods, inability to drop coverage might not be so bad of an idea after all.