Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

As Anthem Inc. prepares a broad retreat from the Affordable Care Act's individual insurance exchanges in 2018, you might expect that business to be a drag on the company. 

But Anthem on Wednesday reported third-quarter earnings that beat analyst expectations by nearly 10 percent and boosted its full-year profit forecast. The ACA actually helped. Anthem's medical costs have been lower than expected -- in part due to better-than-expected trends in the individual market.

But instead of building on those gains, Anthem has been forced to curtail its ambitions as the Trump administration actively works to destabilize the individual market. 

Thanks, Now Bye
Improvement in the individual market helped boost Anthem's results this quarter, but won't for much longer
Source: Bloomberg

The company's individual insurance enrollment fell in the quarter from the same period last year, and only about 900,000 of Anthem's 1.7 million individual insurance enrollees (out of the company's total enrollment of over 40 million) come from the ACA exchanges. But this has been one of the company's most volatile markets, with an outsize impact on profitability.

Due largely to those improving cost trends, Anthem now expects its individual exchange business to break even this year. As recently as the second quarter, the company had expected a loss in 2017. The improvement has boosted overall profits and helps confirm the Obamacare market had been stabilizing before President Donald Trump began to sabotage it.

Anthem's ACA business was a profit drag last year, but has improved in 2017
Source: Bloomberg

Throw that stabilization out the window. The enrollment period for the ACA starts November 1, and potential enrollees can look forward to confusion, less support, less time to find insurance, and fewer choices. 

Rather than building on this year's improvement, Anthem is leaving the exchanges in five states and reducing participation in five more for the 2018 plan year. On its third-quarter call, the company said it expects its exchange enrollment to be 70 percent lower next year. 

Anthem expects to claw a small profit at razor-thin margins off that smaller population. The company has done everything it can to minimize risks, retreating to its strongest areas and hiking premiums. But that still might not be enough, given the extent to which the Trump administration's actions are likely to suppress enrollment and hurt the risk pool. 

2018 might have been the year in which the ACA began to mature into a stable and consistently profitable market for Anthem. Instead, investors can look forward to a year of guessing whether Anthem's retrenchment was sufficient and wondering what might have been. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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