Anthem Projects Losses on 2016 ACA Plans, Argues Cigna Deal Will Boost Presence
Major US health insurer, Anthem Inc, recently announced expected losses on their Affordable Care Act (ACA) plans this year, a reversal of the relatively optimistic business tone previously set forth by the company.
Anthem’s financial performance regarding ACA plans has had a relatively stable past compared to other major insurers, which continue to struggle. However, because the insurer – the nation’s second-largest – is also experiencing losses, this announcement could signal instability in the marketplaces, which are the foundation of Obamacare.
Due to higher-than-expected medical costs, Anthem believes it would see a mid-single-digit operating margin loss on its 2016 ACA plans. Anthem posted a profit of $780.6 million, compared with $859.1 million a year earlier. Furthermore, revenue increased 7.2% to $21.46 billion. Anthem’s medical-loss ratio in the quarter rose from 82.1% to 84.2%, in one year’s time.
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Anthem has 923,000 exchange enrollees and offers plans throughout 14 states, where it is a Blue Cross Blue Shield insurer for the many ACA marketplaces.
Anthem Chief Executive Joseph R. Swedish said, “we’re going to be very mindful of what price increases are awarded to us.” He also stated that Anthem will make, “accurate business decisions going into 2017 and beyond regarding [the company’s] continued engagement on a broad scale in the public exchange space.”
In addition to Anthem, a number of other insurers plan to withdraw from the ACA marketplaces in 2017 citing losses. UnitedHealth Group Inc and Human Inc, both recently confirmed that they will pullout of the exchange in the wake of losses.
Anthem and insurer Aetna Inc are currently facing Justice Department suits aimed at stopping their recent deal to acquire Cigna Corp. and Humana Inc. However, Anthem has reportedly claimed it will fight the suit. According to Anthem, acquiring Cigna would likely expand the combined company’s presence into nine new states.
Anthem is forecasting better results next year as the company seeks substantial premium increases. -Julie Gould
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