Tuesday, Aetna Inc said that it no longer planned to expand its Obamacare business next year, and the U.S. health insurer announced the sale of some Medicare Advantage assets as it fights to gain antitrust regulators’ approval for its takeover of Humana Inc.
The company, which is losing money on the plans it sells in 15 U.S. states to individuals on exchanges created under President Barack Obama’s national healthcare law, said it also was looking at whether it should continue to offer the contracts.
That statement is a departure from Aetna’s stance at the beginning of the year, when Chief Executive Officer Mark Bertolini said he believed the insurer had an obligation to stick with the public health exchange market.
Aetna follows UnitedHealth Group Inc., which said in April that it planned to largely exit the Obamacare individual insurance market in 2017.
U.S. Department of Health and Human Services spokeswoman Marjorie Connolly said the exchanges would continue to thrive as insurers compete for consumers’ business.
“Consumers coming back to shop for 2017 will continue to have a robust set of choices,” Connolly said in a statement.
Aetna said its exchange-based plans for individuals had a pretax operating loss of $200 million in the second quarter, and it projected the loss from that business would exceed $300 million by year-end.
The company said the $117 million deal with Molina addressed a major concern of the U.S. Department of Justice in its challenge to the Humana acquisition by giving older people more options for Medicare coverage.
Molina Healthcare Inc plans to buy a portfolio of about 290,000 Medicare Advantage members in 21 states from Aetna and Humana.
Aetna reported higher-than-expected quarterly revenue and earnings on Tuesday as membership grew in its government business, under which it sells Medicare and Medicaid plans.
Shares of Aetna were up 1.6 percent at $116.28 in morning trading.
The insurer affirmed its full-year outlook for operating earnings of $7.90 to $8.10 a share.
Aetna’s medical benefit ratio, the percentage of premiums spent on claims, rose to 82.4 percent from 81.1 percent a year earlier as medical costs increased in the Obamacare business.
Net income rose 8 percent to $790.8 million, or $2.23 per share.
Excluding special items, Aetna earned $2.21 per share, exceeding the analysts’ average estimate of $2.12, according to Thomson Reuters I/B/E/S.
Revenue rose about 5 percent to $15.95 billion, beating Wall Street expectations of $15.69 billion.