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Aetna’s exit to leave around 8,000 in S.C. searching for new health insurance plans

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Approximately 8,000 South Carolinians will have to shop for new health insurance plans after Aetna announced it will exit the Affordable Care Act marketplace.

The move leaves S.C. customers who rely on the federal law for coverage with just two options: BlueCross BlueShield of South Carolina and BlueChoice HealthPlan of South Carolina, an independent licensee of the Blue Cross and Blue Shield Association

United Healthcare left the Obamacare marketplace earlier this year, while Consumers’ Choice Health Plan and Assurant Health stopped offering individual market plans as of 2016.

“We are surprised by Aetna’s decision,” the S.C. Department of Insurance said in a release. “We were in the process of completing the review of their filing for the upcoming Open Enrollment Period when we learned of their decision to no longer offer federal marketplace for South Carolina consumers.”

Open enrollment for 2017 Affordable Care Act plan customers begins Nov. 1. Aetna sold plans in 14 state counties: Berkeley, Calhoun, Charleston, Dorchester, Fairfield, Florence, Greenville, Kershaw, Lancaster, Newberry, Orangeburg, Richland, Sumter and York.

Mark Bertolini, Aetna chairman and CEO, said in a release that the company decided to reduce its public exchange presence because of total pretax losses of more than $430 million since January 2014. Too large a share of individuals in need of high-cost care in the risk pool, coupled with the “current inadequate risk adjustment mechanism,” makes marketplace plans unprofitable, Bertolini said.

“As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Bertolini said. “We are encouraged by a recent announcement that the U.S. Department of Health and Human Services will explore new options to modify the risk adjustment program, and remain hopeful that we can work with policymakers from both parties on a sustainable public exchange model that meets the needs of the uninsured.”

A letter obtained by The Huffington Post via the Freedom of Information act indicates the move was also tied to the Justice Department’s opposition to Aetna’s proposed merger with Humana. In the letter, from Bertolini to the Justice Department, the CEO responded to a department question about how a decision on the proposed merger would affect Aetna’s participation in the marketplace exchange.

“(I)f the deal were challenged and/or blocked, we would need to take immediate actions to mitigate public exchange and ACA small group losses,” the letter said. “Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint. … Instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states.”

The letter was written on July 5, 16 days before the Justice Department announced it would fight the Humana merger.

Aetna will continue to participate in the marketplace in Delaware, Iowa, Nebraska and Virginia and will offer off-exchange individual plans in the “vast majority” of the counties where it offered individual marketplace plans in 2016. The move reduces Aetna’s public exchange participation from 778 counties nationwide to 242.

The company said it will provide resources to assist customers in finding other plans “as appropriate.”

Other insurance companies, including Freedom Life Insurance and National Foundation Life Insurance, both wholly owned subsidiaries of US Health Group, have submitted proposals to sell public marketplace plans in the state, according to the federal health care website. S.C. Department of Insurance spokeswoman Ann Roberson said the department, along with the Centers for Medicare and Medicaid Services, is reviewing all rate and form filings and will provide that information on or before Oct. 7, as it does every year.

More than 220,000 South Carolinians have purchased health care plans through the federal marketplace.

“This is a further illustration that the Affordable Care Act cannot work under this present structure,” the S.C. DOI release said.

Contact Melinda Waldrop at 803-726-7542.

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