Humana pulls out of Obamacare for 2018

Doctor: Obamacare has to go
Doctor: Obamacare has to go

The Obamacare exodus has begun.

Humana (HUM) announced it is pulling out of Obamacare for 2018 on Tuesday, the same day it ended a merger agreement with Aetna (AET).

The company said in a press release it has tried for the past several years to keep selling policies where it could offer "a viable product." It said it increased premiums, exited markets and tightened provider networks in hopes of stabilizing its individual market business.

But an initial analysis of its 2017 consumer base found that it remained riskier than Humana could tolerate. So the company is exiting all 11 states where it sells individual policies, both on the Obamacare exchange and outside of it.

"We are again seeing signs of an unbalanced risk pool based on the results of the 2017 open enrollment period, therefore we've decided that we can't continue to offer this coverage in 2018," said Bruce Broussard, Humana's chief executive, in a conference call with investors.

The insurer, which had roughly 152,000 individual market policyholders, expects to lose $45 million in that segment. Executives noted that they are already seeing higher-than-exepected pharmacy use and admissions among enrollees.

Humana is the first major insurer to exit Obamacare under President Trump, who has promised to repeal the law. On Twitter, the president pointed to the announcement as another example of how the Affordable Care Act is failing.

The past year has been a rocky one for the landmark health reform law. Faced with sicker than expected enrollees, insurers pulled back from the market and hiked premiums. Obamacare supporters called it a transition period that would only last a year. Opponents pointed to the problems as a sign that Obamacare was collapsing and things would only get worse.

Related: Insurers warn: We're outta here with no Obamacare replacement

Humana was among several major insurers to pull back from Obamacare for 2017, after having to pay higher-than-expected claims for its patients. The Louisville, Kentucky-based insurer stopped offering coverage in eight states and nearly 90% of the counties where it operated last year.

Related: Trump pulls Obamacare ads days ahead of enrollment deadline

Insurers have also grown increasingly jittery as Congressional Republicans remain divided over how to repeal and replace Obamacare. Several large carriers -- and the industry's lobbying group -- have warned that they will leave unless lawmakers provide more clarity about their plans for the health reform law.

Aetna and Anthem (ANTX) recently said they were evaluating their participation in the exchanges. They plan to announce whether they will continue in the spring, which is when carriers have to file their policies and premiums for 2018 with state regulators.

Related: Aetna-Humana & Anthem-Cigna: Two mergers die in one day

Humana said it will continue to service its current policyholders throughout the rest of this year.

The news comes hours after Aetna and Humana said they're calling off their $34 billion merger. Just hours later Cigna (CI) said it's calling off its $54 billion deal with Anthem.

Both deals were targeted by the Justice Department and were recently blocked by federal judges, citing antitrust concerns. Aetna said it will pay Humana a $1 billion breakup fee.

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