UNH UnitedHealth Group Inc

Aetna Inc. will withdraw from 11 of the 15 states where it currently offers plans through the Affordable Care Act exchanges, becoming the latest of the major national health insurers to pull back sharply from the law's signature marketplaces after steep financial losses.

Aetna's move will sharpen concerns about competitive options in the exchanges—and it puts at least one county, Pinal in Arizona, at risk of having no insurers offering exchange plans in 2017, a circumstance that would present a major challenge to the basic mechanics of the ACA.

The law mandates that most people acquire health coverage, and offers subsidies to lower-income consumers who don't qualify for Medicaid. To obtain the subsidies, though, people are supposed to purchase their plans through ACA exchanges.

Stephen Briggs, a spokesman for Arizona's state insurance regulator, said the state currently has no insurers that have filed to offer exchange plans in Pinal, a county in the Phoenix area. "It's a concern for us," he said, but the regulator doesn't "have any legal leverage to compel anyone to offer a plan." However, the regulator is speaking to other insurers about offering exchange plans in Pinal, he said, and "circumstances could change."

A spokesman for the federal Department of Health and Human Services said, "we are working collaboratively with the Arizona Department of Insurance and remain confident that all Arizona residents will have access to coverage next year."

Blue Cross Blue Shield of Arizona said in June that it would withdraw from Pinal County and Maricopa County, in the wake of steep losses, but maintain its exchange presence in the remainder of the state. The nonprofit had said in June that it stayed in more-rural counties partly because it "couldn't overlook that several counties would have no options or very limited access if we didn't find a way to stay in the market." A spokeswoman had no immediate comment late Monday.

Aetna will reduce the number of counties where it sells exchange plans next year to 242 from 778, a dramatic turn that came a few weeks after the insurer said it expected steep losses for the year and would reconsider its participation in the market, which it had previously called an important opportunity.

The insurer earlier this month also said it would cancel a potential expansion into five new states. Aetna has been a major player in ACA business, with about 1.1 million individual enrollees, roughly 838,000 of whom purchased their coverage on the exchanges.

In a statement, Aetna Chief Executive Mark T. Bertolini said the pullback will "limit our financial exposure moving forward," and added that Aetna "may expand our footprint in the future should there be meaningful exchange-related policy improvements."

Aetna's move comes after UnitedHealth Group Inc. and Humana Inc. already unveiled major reductions in their ACA-plan offerings, and as more nonprofit cooperative insurers have said they will fold.

"I see an erosion of freedom of choice," said Jim O'Connor, a principal at consultants Milliman Inc., both among different insurers but also among health-care providers, as more exchange plans feature limited networks of hospitals and doctors.

In a statement, Kevin Counihan, a Department of Health and Human Services official who oversees the federal marketplace, said Aetna's decision "does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year and every year after that."

The four states where Aetna will remain on the ACA exchanges are Delaware, Iowa, Nebraska and Virginia. The insurer said it will maintain a considerably broader footprint for selling individual plans off the exchanges.

The list of states where Aetna will no longer offer ACA exchange plans includes around nine where UnitedHealth too is pulling out—among them are Arizona, North Carolina, Kentucky and South Carolina.

Already, Aetna's previously announced decision to cancel possible expansions meant that Oklahoma, where it had filed to begin selling ACA plans, is likely to become the latest state with just one marketplace insurer next year. Others are likely to include Alabama, Alaska and Wyoming.

The withdrawals come as the biggest insurers continue to roll up losses on their ACA business—all five major national companies now expect to be in the red​ on that business this year. Aetna said it expected a loss of more than $300 million for the year on its ACA plans amid mounting medical costs among enrollees. The insurer lost about $200 million in the second quarter on the plans.

A number of other insurers, many focused largely on Medicaid plans, have said their ACA business is doing well, and they will maintain or expand it.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

August 15, 2016 22:25 ET (02:25 GMT)

UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Mar 2024 to Apr 2024

UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Apr 2023 to Apr 2024