Aetna is changing its mind on Obamacare — now that it is projecting it will lose $300 million on health exchanges this year.

The health insurer’s CEO, Mark Bertolini, said today that the company has canceled plans to offer health insurance policies in more states next year, including Indiana. He also said the company is weighing whether to continue to offer plans on the health insurance exchanges set up by the Affordable Care Act. Aetna currently offers plans in 15 states.

“We are evaluating our footprint as it exists today to understand what solutions we can put forward to either fix the business or exit the business,” Bertolini said.

Aetna’s boss also said the company now projects to lose $300 million this year on ACA policies it has sold to individuals. That’s a marked change from a few months ago, when Bertolini said he expected the company to break even on its ACA business.

In May, the CEO said Aetna has gained 911,000 customers through exchanges and has 1.2 million customers with ACA-compliant health insurance. The company would have had to spend about $2 billion to acquire those customers without the ACA, which is much higher than the losses the company has suffered in the program in the last 2.5 years, he said.

“We see this as a good investment, hoping that we have an administration and a Congress that will allow us to change the product like we change Medicare every year and we change Medicaid every year,” Bertolini said at the time. “We haven’t been able to touch this product because of the politics, but if we get to that point, we believe we are in a very good place to make this a sustainable program.”

Other insurers, including Louisville-based Humana, the company that Aetna wants to buy, have reported that they’re struggling with Obamacare patients. The insurers have said the patients’ health insurance premiums are not enough to cover their medical costs.

Rising costs for needed care

Mark Bertolini

Mark Bertolini

Today, Bertolini told analysts that the reimbursement mechanics of the Affordable Care Act have put the company in a tough position. People who are signing up for health insurance need the care — but many of the insurers are losing money because they’re not collecting enough in health insurance premiums to cover the high costs of care, especially for prescription drugs.

“The people that are seeking care through these exchange products need this care,” he said. “So these aren’t people running off to get services that they don’t need.”

But, he said, Aetna is seeing costs for the Obamacare patients increase by double digits year-over year. Pharmacy costs are increasing at double the rate, and costs for specialty drugs are increasing at triple that rate, Bertolini said.

“Given that the risk adjustment mechanism does not include pharmacy … nobody is getting adequately reimbursed,” he said.

Aetna today reported second-quarter revenues of nearly $16 billion, up 4.7 percent. Net income, at $791 million, was up 8 percent. Shares were up 1.1 percent in late afternoon trading. The S&P 500 was down about 0.5 percent.

Humana will announce earnings Wednesday.

Health care fraud contributing?

American Renal logoAn interesting side note: Bertolini also blamed the company’s struggles with the exchanges on “third parties paying premiums for special interest groups.” He’s referencing health care providers that are pocketing higher reimbursements for their services by steering patients away from Medicare and Medicaid (which have lower reimbursement rates) and toward private insurance plans (which have higher reimbursement rates) on the exchanges.

UnitedHealthcare filed a lawsuit last month in Florida alleging that American Renal Associates Holdings engaged in a fraudulent and illegal scheme to bilk UnitedHealthcare out of thousands of dollars for kidney dialysis services.

While Medicare and Medicaid pay the health care provider $200 per dialysis session, American Renal saw that it could charge UnitedHealthcare $4,000 for the same services, according to the lawsuit. Because of the higher reimbursement rates, American Renal encouraged patients suffering from end-stage renal disease to drop their government insurance and instead obtain insurance from United, the suit alleges. To pay for the commercial insurance policy, American Renal provided the patients with help from the nonprofit American Kidney Fund, counseled them to enroll in the plans that would result in the highest out-of-network reimbursements, and “waived the patients’ copay, coinsurance and deductible obligations” to American Renal, the lawsuit reads.

American Renal said in filings with the SEC that the lawsuit is “without merit” and the company intends to “vigorously defend itself.”