Insurance group Aetna is withdrawing plans to expand its ObamaCare business into five more states in 2017, and rethinking its participation in the healthcare program.
The announcement comes just two weeks after the U.S. Justice Department derailed the company's takeover plans of another insurance company, Humana, which also revealed it will cease offering ObamaCare coverage in eight states next year.
Support For ObamaCare Declines
Aetna offers ObamaCare, also known as the Affordable Care Act (ACA), in 15 states but the group's decision to scale back its expansion is seen as another setback to U.S. health law. ObamaCare has suffered a decline in support from most insurance groups, including UnitedHealthcare and Blue Cross Blue Shield.
UnitedHealth is canceling coverage plans in states where it currently operates, namely Michigan, Georgia and Arkansas. The company is the largest insurer in the U.S. in terms of market value and participates in 34 ACA state exchanges. It is predicted to lose $500 million under the program this year, after it registered losses of $475 million in 2015.
Aetna, on the other hand, is expected to lose $300 million on the government-initiated coverage, further raising questions on the efficacy of President Obama's legacy healthcare plan.
There are more than 11 million individuals under ObamaCare, and Aetna covers 838,000 cases.
The Free Market And ObamaCare
What comes as a surprise for many in Aetna's decision, however, is the fact that the group in April informed investors it would break even on ObamaCare plans.
This illustrates the clash between the free market and healthcare, especially when the latter is seen more as a commodity than as a basic social service offered by the government.
ObamaCare, in theory, hopes to create "major business opportunities for insurers," as Marjorie Connolly, press secretary of the U.S. Department of Health and Human Services, puts it.
The ACA exchanges aim to keep insurance businesses profitable while enabling consumers to purchase affordable healthcare plans, sometimes with government aid.
For the Obama administration, however, the consumers' choice — of which affordable care plan suits their needs — will dictate which privately managed healthcare company will succeed in the marketplace.
Antitrust Lawsuits In The Healthcare Industry
Amid losses, health insurers have looked into possible mergers and acquisitions, but these have been gravely frowned upon by the DoJ.
In July, the department lodged antitrust lawsuits to prevent Aetna's $37 billion merger plans with Humana and also Anthem's $54 billion purchase plans of Cigna.
Such proposals, the DoJ argues, would have hampered competition in the health insurance industry since only three key players would end up fighting for market share.