HARTFORD, Conn., Aug. 2 (UPI) -- Aetna Inc. has projected a loss on Obamacare plans for 2016 and has canceled its planned expansion to more state exchanges, joining three other major national health organizations in retrenching.
Aetna said it is setting up a reserve of $65 million to account for expected losses on individual plans for the rest of the year in the exchanges for the Affordable Care Act.
"While we are pleased with our overall results, 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," Aetna Chief Executive Mark T. Bertolini said in a release.
Aetna had notified regulators it intended to expand into five new state marketplaces in 2017: Maine, Oklahoma, New Jersey, Kansas and Indiana.
Also this week, Aetna unveiled a deal to sell $117 million worth of assets to Molina Healthcare if it completes a $35 billion merger with Humana. The Justice Department has filed an antitrust suit.
Aetna and Humana said they would sell assets representing of 291,000 Medicare Advantage enrollees in 21 states to Molina, mainly a Medicaid insurer.
"We believe that these divestitures taken together would address the Department of Justice's perceived competition concerns regarding Medicare Advantage," Aetna and Humana said in a statement.
Overall, Aetna reported earnings of $790.8 million, up from $731.8 million a year ago.
In April, Aetna had said that after a loss last year, it was aiming to roughly break even on its exchange business this year and become profitable in 2017. At the time, Bertolini called its position in the ACA marketplaces a "good investment."
Last week, Anthem announced it roughly broke even on individual plans in 2015 and expected improvement next year, but it would re-examine its full commitment to the exchanges.
UnitedHealth Group Inc. and Humana have also projected larger 2016 exchange losses and said they will largely withdraw from them next year.
Cigna Corp. reported lower earnings last week, mainly from higher costs in the exchanges. But it plans to expand into new markets, including Chicago, from its seven states. The Justice Department also has filed suit against Cigna's $54 billion merger with Anthem.
Blue Cross and Blue Shield may become the only provider in some states.
"What you end up with is the not-for-profit Blues and other regional plans becoming the insurer of last resort in parts of the country," Sam Glick, a partner with consulting firm Oliver Wyman, a unit of Marsh & McLennan Cos., told The Wall Street Journal. He noted a number of the Blue insurers are themselves losing money on the exchange business.