Aetna CEO Mark Bertolini is not hopeful for the future of the individual health insurance exchanges created by the Affordable Care Act (ACA), also known as Obamacare, based on comments he made on Wednesday.
Bertolini, whose company is one of the five large public health insurers, said that the exchanges are in a “death spiral” during a speech at a Wall Street Journal conference.
“It’s not going to get any better, it’s getting worse,” said Bertolini according to Politico’s Paul Demko.
The idea behind Bertolini’s comments are that as premiums increase on the exchanges, fewer young and healthy people will sign up for coverage.
This will leave a higher percentage of older, sicker people on the exchanges, making them more expensive for insurers. The losses from this sicker risk pool will cause insurers to pull out of the exchanges, fewer choices on the exchanges will lead to higher prices, and thus even fewer healthy people will sign up to balance the pool.
Bertolini has long expressed doubts about the exchanges. Aetna pulled its offerings from roughly 70% of the places it was doing business last year and the CEO said during a recent earnings call that the company is considering its footprint in 2018.
During the block of a proposed merger between Aetna and Humana, however, a federal judge ruled that Aetna and Bertolini had cut their exposure to Obamacare to induce cooperation from Department of Justice to approve the merger.
In a letter to the DOJ in July, Bertolini said that the company would reduce its footprint in the exchanges if the DOJ blocked the deal. Bertolini claimed this was due to the loss of cost savings from the merger, but the judge said the move showed that “Aetna tried to leverage its participation in the exchange for favourable treatment” for the deal.
During the 2016-2017 open enrollment period, the total number of people signing up for insurance through the federal Heathcare.gov exchange fell by 400,000. Much of this drop was due to a significant slowdown in enrollments after President Donald Trump took office and pulled large amounts of funding for enrollment outreach.
Despite the drop in enrollment, health policy experts said the exchanges were not necessarily in a “death spiral” and their future depended on the repeal and replace process being undertaken by Republicans.
This, however, was not enough to appease Humana — another of the big five insurers — which said it would pull all of its Obamacare plans from the exchanges in 2018.
Additionally, the Trump administration rolled out proposals for new rules that would cut the exchanges’ open enrollment period in half and institute other reforms in an attempt to stabilise the individual heath insurance market.