Major U.S. health insurer Humana reported Wednesday that its profits fell by 30 percent at the end of last year due to losses among new Obamacare customers.
The insurance company, which is expected to merge with Aetna later this year, reported a net income of $101 million in the fourth quarter of 2015, down from $145 million a year earlier. The company said the decline resulted from setting aside $176 million to account for losses expected from new, expensive customers enrolling in health insurance plans offered on the marketplaces set up under President Obama’s Affordable Care Act.
“The benefit ratio associated with many of the company’s individual commercial products, in particular ACA-compliant offerings, significantly exceeded its pricing expectations,” Humana said in its earnings statement. “The company continues to evaluate its participation in the individual commercial business for 2017.”
Humana is among several major insurers reporting losses from the new customers, many of whom previously lacked health insurance because they had preexisting health conditions or couldn’t afford it. Overall, the marketplaces are attracting consumers who tend to be sicker and thus more expensive than people who already had health coverage.
As a result, some insurers, including UnitedHealthcare, are considering pulling out the Obamacare marketplaces next year, while others like Cigna have said they’ll stay in despite their losses.
Humana announced last November in its third-quarter earnings report that it would discontinue several products it had been offering on the marketplaces, affecting about 100,000 individuals.
