Aetna reported nearly 600,000 enrollments through state and federal exchanges. That was unchanged from the close of the second quarter, suggesting that any attrition from new members failing to pay their bills has been offset by additional sign-ups from individuals who qualify for special enrollments.
Aetna sold products through the exchanges in 17 states this year, a more aggressive approach than most publicly traded insurers. The Hartford, Conn.-based company will add one additional state, Georgia, for the next open enrollment window, which begins Nov. 15.
In addition, Aetna reported nearly 500,000 individual customers that bought products off the exchanges. Company officials said they anticipate the exchange business to turn a modest profit this year, while they anticipate losing money on their non-exchange individual business in 2014.
Aetna will not continue to sell individual plans that don't comply with the coverage requirements of the Patient Protection and Affordable Care Act for 2015. Those customers will have to switch to ACA-compliant plans, which will likely result in higher premiums, or switch carriers. The Obama administration is allowing noncompliant plans to remain on the market for up to three years, following an outcry over cancellations.
Aetna expects to book nearly $100 million in revenue from risk-protection programs—the so-called “three Rs”—built into the ACA. Company officials are basing that calculation on data compiled by Wakely Consulting Group, not information provided by the federal government.
“We know it's not perfect,” Shawn Guertin, Aetna's chief financial officer, said of the data. “We've taken a cautious tack on this all year.”
A recent report by Citi Research raised concerns about the financial viability of the risk-corridor program, estimating that companies are anticipating payments of at least $1 billion from the federal government. The Obama administration has indicated that the program will be budget neutral.
The individual market remains a tiny share of Aetna's overall business. The company reported 23.6 million members at the close of the third quarter, up 470,000 over the three-month period. Aetna has seen steady growth in its Medicare and Medicaid business.
Medicare Advantage enrollment swelled to 1.1 million at the close of the third quarter, an 18% increase over the prior year. The company had 2.1 million Medicaid customers at the end of September, a 1.6% increase from a year ago.
Aetna's profits were driven in part by a lower medical-loss ratio in its government business. The company spent 84% of revenues on medical costs during the quarter, down from 87% in 2013. That was offset by a slight increase in the medical-loss ratio on its commercial business, from 80.5% a year ago to 81% at the close of the third quarter. Company officials attributed that rise in part to the cost of expensive new treatments for hepatitis C.
Aetna's stock price is up roughly 15% since the start of the year.
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