Aetna recorded a profit loss of $381 million in the first three
months of 2017, thanks to costs related to its failed tie-up with insurer
Humana.
At the same time last year, Hartford, Conn.-based Aetna's profit totaled $737 million.
The failure of the $37 billion merger, which was blocked by a federal judge in January for threatening to harm competition in Medicare Advantage, was expected to squeeze Aetna's bottom line.
The two insurers spent 19 months and millions of dollars in legal and financial fees preparing for the deal. When it fell through, Aetna had to pay Humana a $1 billion breakup fee, or about $630 million after taxes.
Aetna also had to fork over a $52.5 million break-up fee to Medicaid managed-care insurer Molina Healthcare, which had agreed to acquire divested Medicare Advantage assets from Aetna and Humana to satisfy Justice Department antitrust concerns.
Aside from the failed merger, Aetna's lower membership in the Affordable Care Act public insurance exchanges also weighed on its earnings.
Aetna pulled out of exchanges in 11 states in 2017, forcing hundreds of thousands of plan members to find a new insurer. It offers exchange plans in just four states now.
The insurer's commercial membership fell by 681,000 members in the first quarter 2017 over 2016, largely due to those exchange losses.
Aetna set aside $110 million in the first quarter for future losses from individual market plans. It lost $450 million from the plans it sold on exchanges in 2016.
Meanwhile, Aetna's Medicare Advantage membership grew by 81,000 members in the quarter compared with the same period a year ago. Medicaid membership fell by 90,000. Total membership declined to 22.4 million, compared with 23.1 million at the same time last year.
Lower membership and reduced premiums helped decrease first quarter revenue by 3.4% to $15.2 billion over 2016.
The same factors raised the medical loss ratio to 82.6%, compared with 80.5% a year ago.
At the same time last year, Hartford, Conn.-based Aetna's profit totaled $737 million.
The failure of the $37 billion merger, which was blocked by a federal judge in January for threatening to harm competition in Medicare Advantage, was expected to squeeze Aetna's bottom line.
The two insurers spent 19 months and millions of dollars in legal and financial fees preparing for the deal. When it fell through, Aetna had to pay Humana a $1 billion breakup fee, or about $630 million after taxes.
Aetna also had to fork over a $52.5 million break-up fee to Medicaid managed-care insurer Molina Healthcare, which had agreed to acquire divested Medicare Advantage assets from Aetna and Humana to satisfy Justice Department antitrust concerns.
Aside from the failed merger, Aetna's lower membership in the Affordable Care Act public insurance exchanges also weighed on its earnings.
Aetna pulled out of exchanges in 11 states in 2017, forcing hundreds of thousands of plan members to find a new insurer. It offers exchange plans in just four states now.
The insurer's commercial membership fell by 681,000 members in the first quarter 2017 over 2016, largely due to those exchange losses.
Aetna set aside $110 million in the first quarter for future losses from individual market plans. It lost $450 million from the plans it sold on exchanges in 2016.
Meanwhile, Aetna's Medicare Advantage membership grew by 81,000 members in the quarter compared with the same period a year ago. Medicaid membership fell by 90,000. Total membership declined to 22.4 million, compared with 23.1 million at the same time last year.
Lower membership and reduced premiums helped decrease first quarter revenue by 3.4% to $15.2 billion over 2016.
The same factors raised the medical loss ratio to 82.6%, compared with 80.5% a year ago.
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