Just as the U.S. Justice Department formally moved to block the merger between Humana and Aetna, Humana said it is significantly reducing its individual health plans sold on and off the Affordable Care Act's exchanges.
Starting in 2017, Humana will sell individual plans in only 11 states, compared with 19 states for this year, the Louisville, Ky.-based insurer said in a release Thursday. The ACA retreat was revealed in a company update to increase its profit estimates for the year.
The reduction is even starker at a local level. Humana's individual plans will be offered in “no more than 156 counties” next year, compared with 1,351 counties this year. Humana expects to collect anywhere from $750 million to $1 billion in premiums from its individual ACA plans in 2017, a reduction of almost 80% from the $3.4 billion premiums projected for 2016.
Humana pre-recorded a $176 million loss on 2016 ACA plans in February, and the insurer added another $208 million in expected losses Thursday.
Humana hinted earlier this year that it would heavily increase premiums to its individual ACA plans for 2017 and exit “certain statewide” markets. Humana, like its for-profit competitor UnitedHealth Group, enrolled many people who were sicker than originally expected. UnitedHealth will participate in no more than three ACA marketplaces for 2017.
The individual market represents a small fraction of revenue for Humana and UnitedHealth. However, the movement away from the exchanges by both companies has raised concerns among some policymakers that the ACA exchanges have not attracted enough younger people, a demographic that would balance out the medical risk and keep premiums more stable.
Despite the exchange losses, Humana raised its earnings expectations due to “better-than-anticipated performance” from its Medicare Advantage plans, which are the backbone of the organization.