According to a recent Forbes article, Aetna CEO Mark Bertolini previously described public exchanges under the Affordable Care Act (ACA) as a break-even opportunity. Now, he’s singing a more optimistic tune. He recently announced that he expects them to be a desirable growth opportunity with the potential to generate a reasonable ROI.
Aetna’s first-quarter earnings may have helped change his mind. They disclosed that 950,000 members were enrolled in coverage purchased on public exchanges from 17 states, proving the boost in individual consumers buying subsidized plans.
Bertolini described Aetna’s most recent open enrollment period as “highly successful” and decided to raise the company’s 2015 earnings to $7.20–$7.40 per share (up from at least $7). Several factors likely influenced his decision, including the improved outlook in ACA-related business, Medicare payment rates, and growth in Medicaid enrollees.
Aetna isn’t the only large health insurer to boost its 2015 forecast this quarter. UnitedHealth Group also believes its sales and profits will increase this year as more and more consumers purchase their insurance coverage on exchanges and from the expanded Medicaid program under the ACA.
Due to the expanded Medicaid program in some states, Aetna expects to add more than $1 billion in revenue growth. Already this year, enrollment is up 6% to nearly $2.1 million compared to $1.98 million in the first quarter of last year.
That’s not all. Operating profits are also on the rise. Aetna experienced a significant jump of 8% in the first quarter of 2015 to $15.1 billion compared to $14 billion in the first quarter of 2014. Aetna executives are also optimistic about Medicare Advantage with Bertolini describing the Obama administration’s funding increases as the first in years.