February 15, 2017

Humana to exit all ACA exchange markets for 2018

Daily Briefing

Humana on Tuesday announced that it will withdraw from all Affordable Care Act (ACA) exchange markets for the 2018 coverage year.

Humana made the announcement on the same day it ended its merger agreement with Aetna and one day before the Trump administration proposed rules to help stabilize the individual market.

Aetna, Humana call off merger plans

Humana says it will not sell individual commercial health plans for 2018

Humana said it will not sell individual commercial health plans for the 2018 coverage year. The company added that "substantially all of" its individual health plans are offered through the ACA's exchanges.

Humana had already scaled-back its participation in the exchanges for the 2017 coverage year, citing financial losses spurred by enrolling sicker-than-expected customers under the ACA. Humana said it had pursued "business changes, such as modifying networks, restructuring product offerings, reducing the company's geographic footprint, and increasing premiums" in an attempt to help stabilize its individual commercial business "to the point where the company could continue to participate in the" exchanges.

However, the company said an initial analysis of data on its exchange plan membership following the ACA's latest open enrollment period showed "further signs of an unbalanced risk pool." As a result, Humana said it would not offer individual commercial health plans for 2018.

Humana's decision will not affect exchange plans it sold for the 2017 coverage year. The company said it "remains committed to serving its current members across 11 states where it" sold exchange plans for 2017.

Implications

According to the New York Times, Humana is not a "major player" in the individual insurance market. However, the move will affect about 150,000 policyholders in the 11 states where Humana sold exchange plans for 2017 because those consumers likely will have to switch insurers for the 2018 coverage year.

But some individuals affected by the move could face a dearth of coverage options for 2018, the Times reports. For example, Humana's withdrawal will leave 16 counties in Tennessee without an insurer for the 2018 coverage year, according to the Kaiser Family Foundation.

Further, Humana is one of only two insurers that sell exchange plans in counties in Mississippi and Georgia, The Hill reports.

Gerald Kominski, director of the University of California-Los Angeles' Center for Health Policy Research, said Humana's decision "will introduce another degree of uncertainty" in the exchange market.

Sabrina Corlette, a research professor at Georgetown University, said Humana's decision "could be a harbinger of things to come," adding that insurers are "not required to participate in these markets."

Policymakers react

President Trump cited Humana's exit as evidence the ACA is failing, writing in a tweet that policymakers would seek to repeal and replace the law and "save health care for ALL Americans."

House Energy and Commerce Committee Chair Greg Walden (R-Ore.) in a statement said Humana's move "reflects the realities of a failing law." He added, "Humana isn't the first insurer to flee [the exchanges], and unfortunately, they probably won't be the last ... Patients and families across the country are seeing fewer choices and facing higher costs."

Meanwhile, Democrats blamed Republicans for creating instability in the exchange market, the Los Angeles Times reports.

Senate Minority Leader Chuck Schumer (D-N.Y.) said, "Congressional Republicans' reckless and irresponsible plan to repeal the [ACA] is already taking health care away from the American people and causing confusion and instability in the insurance market." He added, "Anyone losing access to their insurance has only [Trump] and congressional Republicans to blame."

Similarly, House Democratic Whip Steny Hoyer (D-Md.) said, "By continuing to pursue a repeal of the [ACA]—without a real plan to replace it—Republicans are effectively forcing insurers to exit the [exchanges], a trend that will continue unless their rhetoric and policies change" (Levey/Petersen, Los Angeles Times, 2/14; Humana release, 2/14; Abelson, New York Times, 2/14; Pugh, McClatchy/Sacramento Bee, 2/14; Hellmann, The Hill, 2/14; Howell, Washington Times, 2/14).

Health care industry trends for 2017

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