Humana announced Tuesday that it would no longer participate in the Obamacare marketplaces, making it the first major insurer to withdraw from the exchanges since Trump’s election.
In a statement to investors, Humana didn’t talk about the current uncertainty surrounding the health law’s future. Instead, it cited problems from last year, suggesting that the people who signed up were sicker than the insurer expected. This was Humana’s statement:
Based on its initial analysis of data associated with the company’s healthcare exchange membership following the 2017 open enrollment period, Humana is seeing further signs of an unbalanced risk pool. Therefore, the company has decided that it cannot continue to offer this coverage for 2018. Through the remainder of 2017, Humana remains committed to serving its current members across 11 states where it offers Individual Commercial products. And, as it has done in the past, Humana will work closely with its state partners as it navigates this process.
“Unbalanced risk pool” is insurance jargon for too many sick people and not enough healthy enrollees to balance out their costs.
President Trump quickly seized on the news via Twitter:
Obamacare continues to fail. Humana to pull out in 2018. Will repeal, replace & save healthcare for ALL Americans. https://t.co/glWEQ0lNR4— Donald J. Trump (@realDonaldTrump) February 14, 2017
So what does this mean? It certainly isn’t good for the marketplaces that Humana has decided to sit out 2018. Even before the election, the Obamacare marketplaces were struggling to attract carriers. UnitedHealth and Aetna exited the markets last year. Even Humana was already shrinking its market presence: It downsized from selling in 19 states in 2015 to 11 states last year.
The Humana exit will be hardest felt in some areas of the country where the insurer was an especially big presence. There are 16 counties in Tennessee, for example, where Humana was the only insurer last year. These are now places that the Trump administration will need to convince another insurer to step in, or risk having no plans on the marketplace at all.
At the same time, the move does not portend the imminent collapse of the marketplaces. Most insurers seem to be taking more of a “wait and see” approach, since they won’t have to decide whether to sell until late spring. The Trump administration is reportedly working on some new regulations that would help insurers attract a healthier mix of people — some of the exact changes that insurers have clamored for but never got under President Obama.
Bottom line: It is, frustratingly, way too soon to know whether Humana is an outlier — or a canary in the coal mine.