CVS Health Is Getting Into the ACA Marketplace Market

CVS Health is going to re-enter the ACA marketplaces next year with the first-ever health insurance policies branded as CVS Health-Aetna, the company’s new president and CEO said during an earnings call this morning that covered its 2020 fourth quarter and year-end results.

“As the ACA has evolved there is evidence of market stabilization and remedies to earlier structural issues,” said Karen S. Lynch, the president and CEO of the insurance and pharmacy giant. “It is now time for us to participate in these markets.”

Karen Lynch

Lynch said there would be “more to come when we talk in the second quarter” about howmany markets the company might sell ACA marketplace policies in. She noted that the ACA exchange market was a big one of 10 to 15 million people.

Lynch spoke at some length about the company integrating various kinds of insurance coverage with its Minute Clinics and Health Hubs with benefit design that has low or no out-of-pocket costs for the members who use the clinics and the hubs in its retail stores.

She suggested that might be a plus for its ACA plans: “We view the combination of the insurance and CVS Health assets [as giving] us a unique opportunity to a put a competitive product into the market,” Lynch said.

The financial results presented by Lynch and Chief Financial Officer Eva Boratto largely beat Wall Steet expectations, according to CNBC and Wall Street Journal. For example, operating income went from $4.73 billion in 2019 to $5.45 billion in 2020, a 15.2% increase.

Lynch and Chief Operating Officer Jonathan Roberts also spoke about CVS Health’s large role in COVID-19 testing and vaccination and how those efforts are giving the company access to millions of potential new customers

Jonathan Roberts

“Our customers after they get the vaccine have to wait 15 minutes as we observe them to make sure they don’t have an adverse reaction,” said Roberts. “So we’re going to give them a series of value-adds to encourage them to engage further, so from shopping passes in the store to Minute Clinic education and, ultimately, to CarePass onboarding.”

Roberts continued, “And then, remember as we said earlier, every one of these customers is coming through our digital frontend, so we have their email, we have their text message, we have the ability to communicate with them regularly. So I would think of it as beyond just add-on frontstore. I would think about it as adding new customers to the CVS channel and getting their pharmacy business plus their frontstore business.”

“Frontstore” refers to the nonprescription drug products that CVS sells at is retail locations. Roberts was responding to a question about whether participation in COVID-19 vaccination would benefits its frontend business.

CVS Health currently administering 250,000 doses of COVID-19 vaccine per week in 11 states at 350 locations, Lynch said on the call. The company has the capacity to deliver between 20 and 25 million doses per month, depending the on availability of the supply, she said.

CVS Health has also played a large role in vaccinating the residents and staff of long-term care facilities. Lynch says the company has administered 3 million vaccine doses to patients and staff at long-term facilities and that it will finish administering the second doses by the end of the month.

Lynch said there would be “more to come when we talk in the second quarter” about how many markets the company might sell ACA marketplace policies in. She noted that the ACA exchange market was a big of 10 to 15 million people.

During the call, Lynch spoke about the company integrating insurance coverage and its Minute Clinics and Health Hubs with policies that have low or no out-of-pocket costs for members with that kind of Aetna coverage, and she referenced that in her remarks about the decision to start selling ACA marketplace plans.

“We view the combination of the insurance and CVS Health assets [as giving] us a unique opportunity to a put a competitive product into the market,” Lynch said.

CVS Health received an ACA risk corridor payment last year of $307 million.