Obamacare Stalwart Anthem Seen Likely to Retreat for 2018By
Insurer’s ACA pullback would bolster Trump’s ‘exploding’ claim
Republicans still working on what to do with health law
Anthem Inc. is likely to pull back from Obamacare’s individual insurance markets in a big way for next year, according to a report from analysts who said they met with the company, a move that could limit coverage options for consumers at a politically crucial time for the law.
Anthem “is leaning toward exiting a high percentage of the 144 rating regions in which it currently participates,” Jefferies analysts David Windley and David Styblo said Thursday in a research note.
An exit by Anthem might be devastating to insurance markets created by the Affordable Care Act, which is often called Obamacare. The company, which sells coverage under the Blue Cross and Blue Shield brand in 14 states, is one of the few big insurers that has stuck with the ACA. UnitedHealth Group Inc. and Aetna Inc. have already exited most states, and Humana Inc. is planning to stop offering individual ACA plans entirely for 2018.
If Anthem quits, consumers in parts of Colorado, Kentucky, Missouri and Ohio would be at risk of having no Obamacare insurers for next year, according to an analysis from Axios, a news website. Humana’s exit, similarly, will leave parts of Tennessee with no ACA insurance options, though state officials have said they’re working to attract other insurers.
Anthem is talking with the administration “to emphasize the importance of regulatory and statutory changes in order to ensure sustainability and affordability of the individual market for consumers,” it said in an emailed statement. The company continues to “actively pursue policy changes that will help with market stabilization and achieve the common goal of making quality health care more affordable and accessible for all.”
The insurer lost $374 million on its individual health plans last year, and is targeting a modest profit for 2017, according to Bloomberg Intelligence. Anthem has the biggest financial risk tied to Obamacare among major insurers, with an estimated 8.6 percent of 2017 revenue coming from the individual market, according to Bloomberg Intelligence.
Ammunition for Trump
The pullout would also give more ammunition to President Donald Trump’s administration and Republican lawmakers, who have hedged on their plans for supporting President Barack Obama’s health program after a failed attempt to repeal and replace it. Trump has said the health law is “exploding” and mused about letting it collapse.
“It’s imploding and soon will explode and it’s not going to be pretty,” Trump said on March 24, after Republican lawmakers pulled their proposal to repeal and replace Obamacare due to lack of party support.
Some Republican lawmakers in the House of Representatives have discussed quickly reviving their Obamacare repeal efforts. Others have expressed a desire to move on to overhauling the tax code and funding infrastructure projects, saying the party hasn’t yet reached a consensus on health care.
At the same time, Democrats are likely to blame any weaknesses in the health law’s markets on the Trump administration. The administration faces a number of crucial decisions over the coming months that could help stabilize the health law or undermine it.
Looking for Stability
Anthem’s management said that in order to participate in the ACA, the company needs to see changes beyond a slate of fixes proposed by the Trump administration in February, according to the Jefferies report. And they said Anthem’s management expects approval of “substantial” premium increases for 2018.
As of Dec. 31, Anthem had 1.3 million customers in individual plans that comply with the ACA’s requirements, including 839,000 from the health law’s markets, called exchanges. Plans that comply with the ACA can also be purchased outside the exchanges, such as directly from an insurance company, but those plans aren’t eligible for the health law’s subsidies.
Anthem Chief Executive Officer Joe Swedish had earlier said the company will decide where to offer Obamacare plans by the middle of the year. Anthem has to decide “whether or not we surgically extract ourselves from certain rating regions, or quite frankly even on a larger scale, depending on the stability of the marketplace,” he said in February.
“If we can’t see stability going into 2018 with respect to either pricing, product, or the overall rules of engagement, then we will begin making some very conscious decisions with respect to extracting ourselves,” Swedish said on a call with Wall Street analysts to discuss fourth-quarter results. Ratings regions are geographic areas where insurers sell health plans.