Anthem Quits 2 More Exchanges Amid Regulatory Uncertainty
Anthem Inc. ANTM is quitting public exchange markets in the states of Wisconsin and Indiana for 2018.
Anthem offers plans in 14 states as a Blue Cross Blue Shield insurer for the many Affordable Care Act (ACA) marketplaces. It is among the largest insurers offering plans on ACA exchanges.
Earlier this the month the company called it quits in the Ohio market.
Anthem has joined the suite of other players like UnitedHealth Group Inc. UNH and Aetna Inc. AET, who after having stubbed their toes with unprofitable public exchanges, have substantially rolled back their participation on it. Another major player, Humana Inc. HUM, is planning to stop offering individual ACA plans entirely for 2018.
The downsizing of exchange participation was anticipated since Anthem recently gave enough hints of folding its public exchange business. Management had confirmed, “While the direction in Washington has been positive, we still need certainty about short-term fixes in order to determine the extent of our participation in the individual market in 2018. We will be watching developments closely in the first half of 2017 as we evaluate our longer-term strategy for the health insurance exchanges.”
Anthem has incurred loss on its public exchange business led by huge claims from customers enrolled on public exchanges. The number of healthy and young individuals who enrolled on these exchanges was far less than aged customers and those with pre-existing diseases lacking coverage earlier. This mix of customer population led to a rise in claims as sicker patients went on to utilize medical care under insurance coverage.
Anthem intends to continue its participation on exchanges, only if necessary changes are made to improve its profitability and viability. This calls for a substantial premium increase for 2018.
In the past one year, the stock of Anthem has surged roughly 49.3%, while the Zacks categorized Medical-HMO industry has rallied 31.4%.
The struggles of the top players have to a great extent made it clear that the exchanges put in place by former president Obama to provide subsidized health insurance coverage have not fared well with insurers. They are also concerned about high uncertainty relating to the funding of subsidies that have helped people with low income to buy insurance on these exchanges. Republicans have threatened to do away with these subsidies, which will drive away customers, making insurers feel jittery.
Anthem carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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