AYESHA RASCOE, HOST:
You may know the name CVS because of their pharmacy business, but the health giant has a lot more under its umbrella, including clinics and the health insurer Aetna. Aetna is one of the largest health insurance companies in the country, but starting next year, around 1 million of its members will need new coverage. That's because the parent company, CVS, has said it will exit the Affordable Care Act Health Insurance Exchange, or Obamacare. Bruce Japsen is a senior contributor for Forbes, and he broke the story. Bruce, welcome to the program.
BRUCE JAPSEN: Good to be with you, Ayesha.
RASCOE: So the health exchange was set up, as we said, as a part of the ACA, and it's a place where people can go to shop for federally approved private insurance. Why is Aetna leaving?
JAPSEN: Well, CVS has had a lot of problems with some of their other business, so that's part of it. And they are looking ahead to beyond this year. There is a question about whether the Republicans in Congress are going to renew subsidies that people can get - tax credits, if you will - for buying coverage.
So all along, you can get health care coverage under the Affordable Care Act. You know, they expanded Medicaid for low-income Americans, and then people who couldn't get health insurance through their employer, who bought individual coverage - they could go to the exchanges. And depending on your income, you might be able to get a subsidy and maybe get a policy as low as 50, 80 bucks, 100 bucks a month, which anybody who pays for health insurance knows that's a good deal.
Well, under the Inflation Reduction Act that President Biden signed into law and the Democrats, they expanded subsidies so even more Americans could get less expensive coverage. So we now have had record enrollment in individual coverage under the Affordable Care Act - Obamacare - of about 24 million.
RASCOE: But Bruce, that's sounding like why Aetna should stay in.
JAPSEN: Very much so, very much so. And a lot of the companies, the insurance companies that were out of Obamacare got back in. However, there is a wild card that is going to happen with these budget talks in Washington right now as to whether the Republican Congress - whether they are going to renew these enhanced subsidies.
RASCOE: How will this affect people on the health care exchanges with Aetna pulling out? Like, could it affect people even beyond those who had Aetna through the exchanges?
JAPSEN: So, No. 1, if you are an Aetna subscriber, hopefully you will be able to go to the exchange in the fall and there will be other choices. I kind of think there will be fewer because I don't think this is going to be the last insurance company to pull out. I don't think they're going to pull out across the country, but they'll pull out in different markets. The other thing is, is if you made a certain level of money - let's just say you made $70,000, I think you could probably still get a subsidy, and you could get less expensive coverage on the exchange - you are going to find that if you want to continue, if they do not renew these enhanced subsidies, that it's going to cost you a lot more. And if Aetna pulls out and your doctor is in that network, you might have to look for a new doctor, too.
RASCOE: And we should mention, this is a separate thing, but Aetna is one of three insurers being sued by the Justice Department for allegedly taking kickbacks to brokers who guided customers to their Medicare Advantage plans. That's not Obamacare. That's different. But the DOJ is also alleging that Aetna pressured brokers to enroll fewer Medicare beneficiaries with disabilities. CVS Health disagrees with this and says it will defend itself. But overall, could CVS's decision to withdraw Aetna from Obamacare also be influenced by these costs associated with defending itself against the federal government?
JAPSEN: That's possible. I think broadly looking at the Medicare Advantage space, over half of eligible seniors are picking these Medicare Advantage plans. The Trump Justice Department, going after Medicare Advantage, means that people who are saying that they didn't expect regulations to intensify under a Republican administration are wrong. And the bottom line is, yes, insurance companies and business - they make decisions, and if they think they're going to be hit with costs, they might make decisions to pull out.
RASCOE: That's Bruce Japsen. He's a senior contributor to Forbes. Thank you so much for joining us.
JAPSEN: Thanks for having me.
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