Anthem May Leave Marketplace If Profit Results Do Not Improve Next Year

Fewer people than expected have enrolled and those who have are sicker than expected

Doctor Wearing Lab Coat and Stethoscope / Anthem May Leave Marketplace If Profit Results Do Not Improve Next Year
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November 02, 2016

Another day, another health insurance company plans to leave the Obamacare exchanges if it does not make more money next year.

Insurer Anthem is re-assessing its Marketplace strategy after experiencing losses under the program. As Bloomberg reports, if Anthem pulls out it "would mean that almost all the major American for-profit health insurers have substantially pulled back from the law." To date, UnitedHealth Group, Humana, and Aetna have all withdrawn completely or in part from the exchange, leading to double-digit premium hikes in many places.

Only Blue Cross Blue Shield—under which brand Anthem offers its plans—and Cigna remain. Last month Blue Cross announced that its Marketplace plans would experience a 24.3 percent increase in the premium rates on average.

Reuters reports that Anthem's reason for considering a pullout is that "[the] market for individual health insurance created under President Barack Obama's national healthcare law drew fewer than half the enrollees expected, and the members have higher medical costs than foreseen."

"If we do not see clear evidence of an improving environment and a path towards sustainability in the marketplace, we will likely modify our strategy in 2018," Anthem Chief Executive Officer Joseph Swedish told Bloomberg. "Clearly, 2017 is a critical year as we continue to assess the long-term viability of our exchange footprint."

That assessment, according to Reuters, involves a need "to see profits next year and new regulations to stabilize the market."

Such regulatory changes would include adjustments in the risk payments that the company receives for its sickest customers, plans that are more flexible, and modification of the tax on health insurance that is scheduled to go online in 2018.

Bloomberg reports that another option the company is considering is pulling out of the exchange for some states but not from others.

Although the insurer gained more customers for its Medicaid business this year, its costs also rose, together with costs in its individual plan business. That business includes plans sold on the Marketplace.

Anthem is currently involved in a lawsuit with the U.S. Department of Justice, which sued the company over its intended purchase of Cigna. The agency claims that the purchase would allow the combined insurer too much control over the market for health insurance that is sold to large employers.

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