Health Care Matters | May 9, 2025
Aetna to exit the ACA exchanges in 2026
Fierce Healthcare, Stat, and Modern Healthcare all report that CVS Health announced that its Aetna subsidiary will exit the Affordable Care Act (ACA) insurance marketplaces in 2026. This marks Aetna's second retreat from the ACA markets, having previously exited in 2018 before returning in 2022. The company cited financial losses as the reason, with CVS Health CEO David Joyner stating there is "not a near- or long-term pathway for Aetna to materially improve its position in this product." CVS expects to lose up to $400 million on its ACA plans this year and has set aside $448 million in the first quarter to cover medical claims that won't be covered by premiums. The exit will affect approximately 1 million Aetna policyholders across 17 states. Read more here, here, and here.
Why It Matters
While Aetna's decision appears to be company-specific rather than indicative of broader ACA marketplace problems, experts note that trouble could be on the horizon for the exchanges. The enhanced premium tax credits that boosted exchange enrollment are set to expire at the end of the year, and with President Trump and the Republican-controlled Congress focused on downsizing the federal government and cutting health care spending, an extension of these subsidies seems unlikely. The Trump administration has already begun retreating from exchange support by cutting 90% of the budget for enrollment navigators and considering shortening the open enrollment period.
This development suggests we're likely to see a shift in the ACA marketplace landscape. Without the enhanced subsidies, enrollment will likely decrease and the risk pool could become smaller and sicker, making the marketplace less attractive for insurers, particularly those with smaller market shares like Aetna. Health care providers and remaining insurers should prepare for potential instability in the individual insurance market, while affected Aetna customers will need to find new coverage options for 2026.
Trump's Drug Pricing Strategy: Tariffs and Medicaid MFN Policy
President Donald Trump is advancing a two-pronged pharmaceutical policy strategy aimed at boosting domestic manufacturing while lowering drug prices. His recent executive order directs the FDA to streamline approvals for domestic pharmaceutical plants while increasing fees and inspections for foreign facilities. This comes as pharmaceutical imports surged past $50 billion in March 2025, with companies like Merck and Pfizer stockpiling supplies ahead of potential tariffs. A PhRMA-commissioned study warns that a 25% tariff could increase U.S. drug costs by nearly $51 billion annually. At the same time and in an attempt to offset potential Medicaid cuts, the administration is also proposing a “Most Favored Nation” (MFN) pricing model for Medicaid which would benchmark U.S. drug prices to those paid in wealthier foreign countries.
For manufacturers, these policies create significant challenges. The Inflation Reduction Act constrains their ability to pass tariff costs through to Medicare by penalizing price increases above inflation. Commercial insurers would initially be protected by existing contracts but could face exposure once those expire. The MFN proposal has divided Republicans, with House Speaker Mike Johnson expressing skepticism while Energy and Commerce Chair Brett Guthrie indicated openness to the idea. Read more here, here, and here.
Why It Matters
The pharmaceutical industry faces extraordinary pressure from this two-pronged approach. Tariffs increase manufacturing costs while the MFN policy could slash revenue, creating a potential squeeze on profitability. Industry response will likely include accelerated reshoring of some manufacturing, continued legal challenges to both policies, and attempts to renegotiate ex-U.S. prices upward. The Trump administration’s approach to pharmaceutical tariffs suggests a long-term strategy to reshape the global pharmaceutical supply chain rather than immediate price reductions for consumers. For health care stakeholders, this creates a period of significant uncertainty as supply chains, pricing models, and regulatory frameworks all face simultaneous disruption. The coming weeks will be critical as the industry assesses the concrete details of both policies and adjusts investment and operational strategies accordingly.
Look for the Helpers: How Frontline Clinics Are Meeting Mental Health Needs
Direct Relief, in partnership with the National Association of Free and Charitable Clinics, has awarded $75,000 grants to each of 11 free and charitable clinics across Alabama, Mississippi, and Texas to expand mental health services in medically underserved communities. The initiative, now in its third year, has already reached more than 63,000 beneficiaries, conducted over 24,000 patient screenings for mental health conditions, and trained more than 2,800 community members in mental health promotion and well-being. Through innovative care models and community partnerships, these frontline clinics are transforming the landscape of mental health care access where it's needed most. Read here.
What We Are writing
Recognizing and Supporting Informal Caregivers: A Key to a More Sustainable Health System
Coral Director Kate Freeman teamed up with Coral allies Hope Glassberg of Decipher Health Strategies and Shira Hollander of Tripp Hollander Advisors to dive into the vital role of informal caregivers and what can be done through smart policy to better support them. Tune in next week for their conversation on the Pop Health Podcast and in the meantime, check out Coral’s latest blog on building a more sustainable, person-centered LTSS system. Read here.
What We Are Reading
CMS’s Transforming Maternal Health Model: A Roadmap For States
Authors of a recent Health Affairs Forefront article urge stakeholders to implement the framework being tested in CMS's Transforming Maternal Health (TMaH) model beyond the 15 initial participating states, calling for collective action to shore up maternal health infrastructure, expand the workforce, strengthen care models, and drive innovation nationwide to provide all families with the solid foundation they need to thrive. Read here.
Foundational Values for Whole Person Health
The Milbank Memorial Fund's recent issue brief "Foundational Values for Whole Person Health" examines how health care must balance standardization with personalization to address holistic health needs, identifying entrenched beliefs that hinder whole-person care models and offering opportunities for policymakers, payers, and clinicians to promote health systems that honor patients' lived experiences and priorities. Read here.
New Resource
Raising the Bar Implementation Guide: How to Drive Equitable, High-Quality, Cost-Effective Health Care
The Health Care Transformation Task Force released the Raising the Bar Implementation Guide, which presents strategies and challenges from organizations that implemented health equity initiatives to deliver high-quality care for all patients. Read here.
