Aetna CEO: Ad hoc ACA changes fuel rate hikes


Aetna, which participated in 17 state exchanges this year, expects to raise premiums in those states next year. Rate hikes would range from low single digits to double digits, CEO Mark Bertolini said in a call announcing the insurer's first-quarter earnings.

Bertolini cited the Obama administration's "on the fly" regulatory changes as contributing to half of the premium increases, The Washington Post Wonkblog reported. He also said Aetna withdrew from some markets in 2014 so as not to compete with the new consumer oriented and operated plans (CO-OP).

Net income for the Hartford, Conn., insurer jumped 36 percent year over year to $665.5 million in the first quarter, thanks in part to its Coventry acquisition and pricing discipline.

While the individual market accounts for only 5 percent of Aetna's operating revenues in 2014, the insurer still predicts it will suffer a modest loss from its exchange business, according to the Associated Press.

WellPoint also has announced "double-digit plus" rate hikes for next year, which likely stemmed from the Obama administration's many delays and changes to the Affordable Care Act.

Moody's Investors Service has called one such change--the White House's move to extend noncompliant health plans until Oct. 1, 2016--bad news for insurers. Thanks to that delay, higher premiums that take into account risk pool uncertainty and older enrollees will discourage young adults from signing up for exchange plans. Moreover, the credit rating firm in January downgraded the health insurance sector from stable to negative because of the ever-shifting regulatory environment.

However, a December 2103 report from the Commonwealth Fund found medical costs, not healthcare reform, drove large rate increases for nongrandfathered individual and small group plans.

For more:
- read the Post Wonkblog article
- check out the AP article
- here's Aetna's earnings report

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