Tags: Healthcare Reform | anthem | obamacare | insurance | 2018

Anthem Considering Role in Obamacare Insurance in 2018

Anthem Considering Role in Obamacare Insurance in 2018

(Getty/Joe Raedle)

Wednesday, 01 February 2017 12:48 PM

Health insurer Anthem Inc. on Wednesday said it expected to break even or make a small profit in the Obamacare individual market in 2017 even as it considers pulling out of that business next year.

Individual insurance created by former U.S. president Barack Obama's health reform law, often called Obamacare, has been a difficult business for Anthem and other large insurers, which say the enrollment rules skew the pool of patients toward those who are sick. They say that contributes to higher premiums and makes the plans unaffordable.

U.S. President Donald Trump has vowed to repeal and replace the program, and his fellow Republicans have begun the process. Insurers, which had been seeking changes from Democrats under Obama, are now talking to Republicans.

The Obamacare plans are still likely to be the main individual insurance available in 2018 as replacements are devised. Insurers must submit 2018 Obamacare insurance plans and premiums to regulators by April or May, giving them little time to prepare.

Anthem Chief Executive Officer Joseph Swedish, in discussing the company's stronger-than-expected quarterly profit with investors on Wednesday, said the company was talking to lawmakers and the new administration about its proposed changes to individual insurance.

Shares of Anthem, the No. 2 U.S. health insurer, were up 3.4 percent at $159.37.

"As we approach the end of the first half of this year, we will have to make decision on whether or not we surgically extract ourselves from certain rating regions or even on a larger scale, depending on the stability of the marketplace," Swedish said.

Swedish said he was optimistic that lawmakers and regulators would take up the industry's suggestions.

Anthem's comments follow similar remarks on Tuesday by Aetna Inc.'s CEO, who said that company also was seeking changes and expressed concerns about participating in 2018. Aetna has withdrawn from all but four states for 2017 but still has 240,000 people in ACA-compliant plans.

 

AWAITING CIGNA JUDGMENT

Anthem is still waiting for a ruling on the U.S. government's lawsuit to block its deal to buy Cigna Corp. Most Wall Street analysts expect the deal to be blocked on antitrust grounds.

A different U.S. judge blocked health insurer Aetna's proposed $34 billion acquisition of smaller rival Humana Inc. last week.

"Obviously we would like a decision soon so we can move on, and obviously we are still hopeful too," Swedish said.

Anthem, like Aetna on Tuesday, said it intended to start buying back shares.

"We do not see a likelihood of a second round of public mergers," Piper Jaffray analyst Sarah James said in a client note. " ... Insurers will move to deploy pent-up capital via repurchases and small non-public acquisitions."

Anthem said it expected 2017 operating revenue of $86.5 billion to $87.5 billion. Analysts on average were forecasting $86.68 billion, according to Thomson Reuters I/B/E/S.

The company said it expected earnings of more than $11.50 per share this year before special items, compared with analysts' estimates of $11.53.

Fourth-quarter net income rose to $368.4 million, or $1.37 per share, from $180.9 million, or 68 cents per share, a year earlier.

Excluding items, earnings of $1.76 per share beat the analysts' average estimate of $1.61.

Operating revenue rose 7.3 percent to $21.48 billion. Analysts had expected $20.92 billion.

Anthem's benefit expense ratio, the percentage of premiums spent on claims, rose to 87.2 percent from 87.0 percent a year earlier, largely due to higher medical costs in the individual business and the Medicaid program for the poor, notably in Iowa.

© 2021 Thomson/Reuters. All rights reserved.


   
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Health insurer Anthem Inc. on Wednesday said it expected to break even or make a small profit in the Obamacare individual market in 2017 even as it considers pulling out of that business next year.
anthem, obamacare, insurance, 2018
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Wednesday, 01 February 2017 12:48 PM
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