Humana is considering dropping individual plans from state exchanges in 2017, according to its 10-Q report for the first quarter 2016. 

“We are encouraged by the early indicators we are seeing in our Medicare and Healthcare Services businesses but remain cautious while our healthcare exchange experience continues to develop,” said Brian A. Kane, Senior Vice President and Chief Financial Officer.

The company said it “anticipates proposing a number of changes to retain a viable product for individual consumers,” and that “such changes may include certain statewide market and product exits both on and off exchange.”

Both on and off exchange individual members that renewed in 2015 had higher utilization and pharmacy costs compared to 2014.

As of March 31, Humana had about 875,000 individual members, a loss of about 150,000 members compared to March 2015.

Our Take: When UnitedHealthcare last month said it would exit many of the state exchanges, hair-on-fire analysts predicted that the end of Obamacare was near. Now that Humana is echoing concerns about the viability of this business segment, we’ll be hearing more of the same from the usual suspects.

The reality is that neither payer fully embraced the exchanges from the start. While it is true that fewer carriers in any given market could lead to increased prices, a Kaiser Family Foundation analysis found that had United not participated in 2016 exchanges, plan prices would increase on average about $4 per month for a 40-year-old. That same analysis found, however, that the net effect of United’s absence varied widely by county.

Large payers like Humana were never the right fit for the ACA exchanges. Their business is designed to spread risk across large groups and major commercial customers. Nimble, technology-driven startups like Oscar and Stride Health that operate low-cost, low-price plans will appeal to consumers shopping for health insurance on the exchanges.

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