America's third-largest health insurer is losing $300 million a year on Obamacare

Aetna, the third-largest health insurer in the US, said Tuesday that it is reconsidering its offerings on the state exchanges that make up the back-bone of the Affordable Care Act (ACA).

Here’s a quick rundown of the announcement:

  • Aetna will not expand its Obamacare offerings into the New Jersey and Indiana state exchanges in 2017, as they originally planned.
  • Aetna’s CEO also said the company is “undertaking a complete evaluation” of the Obamacare business.
  • On its conference call, the company said it expects an annual loss on its ACA business “in excess of $300 million.”
  • The move comes after the US’ largest health insurer, United Healthcare, said in April it was abandoning the exchanges almost completely.

In a conference call following the company’s earnings announcement, CEO Mark Bertolini said that the firm has halted its plans to expand into two new states’ exchanges in 2017 and is looking into the reasons for losses in the exchanges it is currently participating in.

Here’s Bertolini (emphasis ours):

“In light of the disappointing year to date performance and updated 2016 projections for our individual on and off exchange products, combined with the significant structural challenges facing the public exchanges, we believe it is only prudent to reassess our level of participation on the public exchanges. Our initial action will be to withdraw our 2017 public exchange expansion plans. Additionally, given the deadline to attest to our final rate filings for 2017, we are also undertaking a complete evaluation of our current exchange footprint as the poor performance of these products warrants such an analysis.”

Originally Aetna was planning to expand to New Jersey and Indiana in 2017. It currently operates in 15 states across the US.

The decision by Aetna comes less than 4 months after the nation’s largest insurer, United Healthcare, decided to roll back almost all of its Obamacare offerings after sustaining losses and after the Department of Justice denied Aetna’s proposed merger with fellow-insurer Humana.

The move could also be worrying for consumers, since the number of insurers offering plans in a state is tightly correlated to the price of insurance.

NOW WATCH: We asked a Navy SEAL what he ate during training, and his answer shocked us

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at