Losses from Obamacare plans slowed this quarter for health insurer Aetna after the company decided to sell plans in fewer states, the company said Tuesday in its third-quarter earnings call.
However, Aetna still expects to "continue to project an underlying loss" on these plans, Chief Financial Officer Shawn Guertin said in the call.
Because the company reduced the number of Obamacare plans it sold and because of improved performance in its commercial business, Aetna's medical benefit ratio — which is the percent of premiums spent on claims — fell to 81.4 percent in its commercial business from 83.8 percent a year earlier.
Aetna will not be selling Obamacare plans during this year's Obamacare open enrollment, which begins Wednesday for plans that will go into effect in 2018.
The company has been gradually withdrawing from the Obamacare exchanges. It had decided to pull out of the exchanges in other states because it lost $700 million between 2014 and 2016 and was projected to lose $200 million in 2017 despite having already significantly reduced its participation in the exchanges from 15 to four states. The company also cited uncertainty over the future of the law as a reason for withdrawing from Obamacare for 2018.
Aetna exceeded expectations for the third quarter overall, noting its sale of Medicare Advantage plans drove growth. Aetna's net income rose to $838 million, or $2.52 per share, during the third quarter. A year earlier Aetna's net income was $604 million, or $1.70 per share.
Aetna is leaving the door open to selling short-term health insurance plans, which were part of President Trump's executive order. The Obama administration limited the plans to three months last year, but Trump has directed federal agencies to see about re-extending them for Obamacare customers who are looking for less expensive options that cover fewer medical services.
"We are already all over that," said Aetna CEO Mark Bertolini said about the possibility of selling short-term plans for up to a year. "As soon as the executive order came out we were on top of it."
Aetna's third quarter earnings report comes just days after reports surfaced that CVS Health has offered to buy the company for $66 billion.
Bertolini acknowledged the reports in the investor earnings call.
"Our policy is not to comment on rumors or speculation," he said.
Aetna’s pharmacy benefits manager contract with CVS Health runs through 2019. Bertolini said Aetna has to make a decision on the contract pharmacy benefit manager contract by mid-2018.