Anthem May Hasten Obamacare Retreat Without Funding AssurancesBy
Health insurer wants commitment to cost-sharing payments
’Time is of the essence’ for membership, markets, CEO says
Concerned by the uncertain future of U.S. health care policy, Anthem Inc. warned it may hasten its retreat from Obamacare’s insurance marketplaces unless it sees a firm commitment from the government to fund the program.
Anthem had been an Obamacare stalwart, but it has already moved to leave some states’ marketplaces that account for about 10 percent of its members under the health program. Without assurance of funding of government subsidies that help patients pay out-of-pocket costs, the company may further cut its participation in the Affordable Care Act, Chief Executive Officer Joseph Swedish said Wednesday.
“Some of our critical decisions will have to occur in a relatively short period of time,” he said on a conference call. “Time is of the essence for us to make the right decisions for the markets we serve, the membership we serve, as well as with the company overall.”
Senate Republicans are pushing for an overhaul of the ACA, which President Donald Trump vowed to repeal and replace during his campaign last year. Lawmakers voted Tuesday to open debate on repealing the law, but the most comprehensive plan put forward by GOP leaders failed in an early vote, amplifying uncertainty over the state of the market.
Most other for-profit insurers have pulled back from Obamacare’s markets after posting losses on health plans for individuals. Anthem said in a statement Wednesday that it saw improved medical cost performance in its local group and individual businesses.
Anthem fell 2.6 percent to $186.58 at 10:11 a.m. New York time.
Still, without the continued government subsidies, called cost-sharing reduction payments, Anthem said it would need to boost rates for its ACA-compliant plans as much as 18 percent to 20 percent. In some markets, Anthem would probably quit instead, the company told investors on a conference call.
“If we aren’t able to gain certainty on some of these items quickly, we do expect that we will need to revise our rate filings to further narrow our level of participation,” Swedish said on the call.
With about 1.5 million customers in ACA-compliant plans in 14 states this year, Anthem is among the biggest insurers in the program. Still, that’s a small part of the company’s 40.4 million members, who consist mainly of customers whose insurance is provided by employers. Anthem also has about 6.5 million members in the Medicaid program for the poor, a program that GOP lawmakers have targeted for cuts in some ACA-repeal proposals.
Anthem recently scuttled a deal to merge with Cigna Corp. that would have made it the biggest U.S. health insurer, amid mounting challenges to the combination on antitrust grounds. The companies are embroiled in a legal dispute over who’s to blame for the failed deal and which company should pay the other a $1.85 billion breakup fee. In the meantime, Anthem is looking for new ways to grow revenue and profits.
The company is also charting a course for how it will manage its drug benefits, after threatening not to renew a contract with Express Scripts Holding Co. Anthem said that its requests for proposals for a new pharmacy benefits manager already suggest that it can save more than $3 billion on drug costs.
Express Scripts said it received a request for a proposal from Anthem and plans to respond. The pharmacy benefit manager, which announced a cost-cutting initiative Tuesday, said that it believes it’s still the best option for Anthem, its biggest client.
Express Scripts’ CEO Tim Wentworth said on his company’s conference call that he has had “an exchange of communications between myself and Joe Swedish,” Anthem’s chief executive officer.
Anthem’s adjusted profit was $3.37 a share in the second quarter, Anthem said in a statement. That beat analysts’ average estimate of $3.23 a share. Earnings excluding some items for 2017 will be more than $11.70 a share, up from an earlier forecast of more than $11.60 a share.