Aetna Says Individual Exchange Business Improved

By Reuters Staff

(Reuters) - Health insurer Aetna Inc, which is in the process of buying smaller rival Humana Inc, said on Monday its Obamacare insurance business improved at the end of year, providing a stronger starting point for 2016.

Aetna said its individual insurance sold on the exchanges created by the Affordable Care Act, also called Obamacare, had operating losses that narrowed to 3 to 4 percent from the mid-single digits earlier in the year.

The late-year improvements in that segment for Aetna contrasted with recent reports from UnitedHealth Group Inc and Anthem Inc, whose profits missed expectations because of fourth-quarter losses in the individual business.

The company reported a better-than-expected profit in the quarter ended Dec. 31, amid a robust performance by Aetna's Medicare business for the elderly and disabled.

Chief Executive Mark Bertolini echoed broader industry concern about the future of the exchanges, however, saying that new government rules were needed to stabilize the pool of customers enrolled in these subsidized insurance plans. Recent changes proposed by the U.S. government do not go far enough, he said.

"We continue to have serious concerns about the sustainability of the public exchanges," Bertolini said.

Bertolini also backed the timeline for an expected closing in the second half of 2016 of its acquisition of Humana for $31 billion, based on Monday's share price. The deal is currently being reviewed by national and state-based regulators.

The Aetna-Humana deal and Anthem Inc's proposed acquisition of Cigna Corp are under intense regulatory and political scrutiny as the deals would reduce the number of major health insurers in the United States to three from five.

The company's medical benefit ratio for its combined government and commercial businesses improved to 81.9 percent from 83 percent a year ago. The ratio compares the amount spent on medical claims with income from premiums.

Net income attributable to Aetna rose to $320.8 million, or 91 cents per share, in the quarter, from $232 million, or 65 cents per share, a year earlier.

Total revenue rose about 2 percent to $15.05 billion. Operating revenue of $15.09 billion was well above the average analyst estimate of $14.93 billion, according to Thomson Reuters I/B/E/S.

Reuters Health Information © 2016 

Cite this article: Aetna Says Individual Exchange Business Improved. Medscape. Feb 01, 2016.