Aetna  USAToday

(USAToday)

Aetna Scraps Obamacare Business Expansion Plans

Industries Reuters

Aetna said it intended to withdraw plans to expand its Obamacare business next year, and the U.S. health insurer announced the sale of some Medicare Advantage assets to get antitrust nod for its takeover of Humana.

Continue Reading Below

Molina Healthcare Inc has agreed to buy from Aetna and Humana - whose merger is being challenged by U.S. antitrust authorities - a portfolio of around 290,000 Medicare Advantage members in 21 states.

The $117 million deal addresses "a key concern of the U.S. Department of Justice in its challenge to the Aetna-Humana transaction" by giving seniors more options for Medicare coverage, Aetna said in a statement.

The company is also evaluating whether it should continue to offer Obamacare plans in the 15 U.S. states it currently sells them in.

U.S. health insurers including Aetna have been losing money in their businesses that offer plans under the Affordable Care Act, better known as Obamacare. Aetna said in April that the program needed to be more flexible to become sustainable.

The company, however, reported higher-than-expected quarterly revenue and profit on Tuesday as memberships grew in its government business, under which it sells Medicare and Medicaid plans.

Continue Reading Below

Aetna's medical benefit ratio - the percent of premiums spent on claims - rose to 82.4 percent from 81.1 percent a year earlier as medical costs increased in the Obamacare business.

Its net profit rose 8 percent to $790.8 million, or $2.23 per share, in the quarter ended June 30.

Excluding items, Aetna earned $2.21 per share, well above the average analyst estimate of $2.12, according to Thomson Reuters I/B/E/S.

Revenue rose about 5 percent to $15.95 billion, comfortably beating the average estimate of $15.69 billion.

(Reporting by Amrutha Penumudi in Bengaluru; Editing by Kirti Pandey)