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 Anthem Chief Executive Officer Joseph Swedish, speaking to analysts
about the company's better-than-expected fourth quarter earnings,
said he was optimistic that will occur soon enough for the insurer
to decide in the next few months how it will proceed.
U.S. President Donald Trump has vowed to repeal and replace
Obamacare, former president Barack Obama's health reform law, saying
it is unaffordable. But he has also promised to fix it and not "pull
the rug" out from under anyone. Insurers say they also want to keep
customers in health plans.
"They have a shared interest in as little disruption as possible for
the market," healthcare research group Avalere Health CEO Dan
Mendelson said.
Anthem and other insurers, such as Aetna Inc, say they need changes
that would improve the balance of sick and healthy customers to be
able to submit 2018 exchange plans in April or May.
"As we approach the end of the first half of this year, we will have
to make decision on whether or not we surgically extract ourselves
from certain rating regions or even on a larger scale, depending on
the stability of the marketplace," Swedish said.
Swedish said Anthem was talking to lawmakers and the new
administration about its proposed changes, and other insurers have
been lobbying as well.
Republican lawmakers have spent years devising ways to replace
Obamacare but have yet to agree on the specifics of how to proceed.
"The window for them to implement those changes in a prudent and
judicious manner is small," said Morningstar analyst Vishnu Lekraj,
referring to Republican lawmakers, "and if they can't get it done
soon, they are going to have to delay, or it might not even happen."
Insurers say they will not be ready to sell any new products until
2019 at the earliest, and these Obamacare plans may be the only
individual products available in 2018. Fewer insurers in the market
mean less competition and possibly higher premiums.
Changes can move forward in various ways. Republican Senator Lamar
Alexander of Tennessee, for instance, has said such insurer requests
should be part of an immediate "rescue package" for the exchanges.
Or the Department of Health and Human Services could make the rule
changes, with the White House signing off.
Anthem and other large insurers say the enrollment rules, lax
eligibility confirmation and premium payments by third parties skew
the pool of patients to the unhealthy.
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Anthem, the No. 2 U.S. health insurer, is one of the biggest players
in the more than 10-million-customer Obamacare individual market. It
is also one of the few large insurers that expect to break even or
be profitable there this year.
The company has more than 800,000 people in plans purchased through
the online exchanges that offer income-based subsidies.
Aetna, which has 190,000 people in these exchange plans, says it
expects to lose money on them.
Shares of Anthem were up 2.7 percent at $158.26.
The company said during the conference call that it was restarting
stock buybacks after a period of inactivity, a change that Aetna is
making as well and which buoyed its shares on Tuesday.
AWAITING CIGNA JUDGMENT
Anthem is still waiting for a ruling on the U.S. government's
lawsuit to block its deal to buy Cigna Corp. Most Wall Street
analysts expect the deal to be rejected on antitrust grounds.
A different U.S. judge blocked health insurer Aetna's proposed $34
billion acquisition of smaller rival Humana Inc last week.
Anthem said it expected 2017 operating revenue of $86.5 billion to
$87.5 billion. Analysts on average were forecasting $86.68 billion,
according to Thomson Reuters I/B/E/S.
The company said it expected earnings of more than $11.50 per share
this year before special items, compared with analysts' estimates of
$11.53.
Fourth-quarter net income rose to $368.4 million, or $1.37 per
share, from $180.9 million, or 68 cents per share, a year earlier.
(Additional reporting by Ankur Banerjee in Bengaluru; Editing by
Lisa Von Ahn)
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