InnovationRx: Aetna Withdraws From The ACA Exchanges

Forbes

07-05-2025

In this week's edition of InnovationRx, we look at Aetna's withdrawal from the ACA exchanges, the potential for digital health consolidation, high error rates from new AI models, a radioisotope deal and more. To get it in your inbox, subscribe here .
CVS chief executive David Joyner Bloomberg Finance
Health insurer Aetna is leaving the Affordable Care Act's individual marketplaces starting in 2026. The move marks the second time Aetna withdrew from the space: It previously pulled out in 2018 and came back in 2021.
Aetna's departure will leave some 1 million members in 17 states searching for new health insurance for next year.
Though that's a fraction of the more than 24 million Americans who signed up for coverage on the exchanges last fall, it is significant and comes at a time when the Trump Administration and Republicans are making it more difficult for health insurers to sell Obamacare.
CVS Health, which owns Aetna, made the announcement of its pullback during its first-quarter earnings call last Thursday. CEO David Joyner told investors on the call that the company was 'disappointed by the continued underperformance' of Aetna's exchange plans, and that Aetna had determined that there was no strategy for it to improve its position in the market. CVS expects to lose as much as $400 million this year on those plans.
The ACA marketplaces sell health insurance to people who are younger than age 65 and who don't have coverage through an employer or with Medicaid. Former President Biden expanded subsidies to people who buy insurance on the Obamacare exchanges in order to make health coverage more affordable, but those subsidies are at risk of expiring at yearend under President Trump.
With Aetna's withdrawal, a big question is whether other insurers will follow suit , leaving people who rely on the individual marketplaces for their health insurance with fewer options.
Fabric CEO Aniq Rahman Fabric
Aniq Rahman, founder and CEO of digital health startup Fabric, has bought four companies over the past two years, including Walmart's telehealth business . He expects to buy more.
'In the current market, there have been so many interesting opportunities that have come up,' Rahman told Forbes. 'I would expect we'll announce one or two more acquisitions this year.'
Call it a sign of the coming digital health shakeout. After growing like gangbusters, there are a number of reasons that the market is poised for consolidation. Companies with good technology may not have the reach to go it alone, while others that received venture funding may now lack the cash to expand or can only raise funds at a depressed valuation. Meanwhile, some larger companies, under pressure from Trump's tariffs, are refocusing.
Rahman, a Forbes 30 Under 30 alum who sold his last company to Oracle in 2017 for an undisclosed sum, started Fabric four years ago to develop technology aimed at improving emergency room operations. Since then, it has expanded into other areas of digital health, including chatbots and telemedicine, helped by $80 million in funding from investors that include Drive Capital, General Catalyst and GV. Venture capital database Pitchbook pegs the company's valuation at $370 million.
Rahman argues that a big problem with digital technology in healthcare is that health systems bought different pieces of tech–a chatbot here, say, and a symptom checker there–that don't speak to each other well. That, he said, has led to opportunities for companies that can pull those different parts together.
'We're looking at dozens of opportunities actively,' he said. 'There's just so much stuff we are seeing. It's coming from everywhere.' BIOTECH AND PHARMA
Nuclear fusion company Shine, which manufactures medical isotopes for radiation therapy, announced plans to acquire the SPECT product portfolio from Massachusetts-based nuclear medicine company Lantheus Holdings for an undisclosed sum that includes both cash and a convertible note. The purchase in Lantheus stock dropped more than 20% Wednesday morning after the deal was announced. DIGITAL HEALTH AND AI
The most recent advanced reasoning models from AI companies OpenAI and DeepSeek turn out higher rates of errors than previous models, according to independent tests by AI company Vectara. For particular applications, the AI models hallucinate (i.e. generate false information) at rates as high as 79%. Although the models studied were general reasoning models, not ones specific to healthcare, these results raise concerns about use of these models in clinical settings–especially since large numbers of physicians have reported using AI tools as part of their decision-making process. PUBLIC HEALTH AND HOSPITALS
The FDA named Dr. Vinay Prasad , a harsh critic of the government's response to the Covid-19 pandemic who has been accused of using his social media platform to spread misinformation about vaccines, to lead its biologics and vaccines division. Former longtime director, Dr. Peter Marks, resigned in March, saying in his resignation letter that 'truth and transparency are not desired by the Secretary [Robert F. Kennedy, Jr.], but rather he wishes subservient confirmation of his misinformation and lies.'
Plus: Care advocates and caregivers led by the groups Caring Across Generations and Care Can't Wait plan to hold a 24-hour vigil for Medicaid at the U.S. Capitol starting Wednesday afternoon. Republicans have been threatening Medicaid, which covers some 80 million Americans. WHAT WE'RE READING
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A patient had a tumor strangling her spinal cord near the base of her skull. Doctors removed it through the patient's eye in a risky surgery that had never been done before.
Rite Aid filed for bankruptcy for the second time in two years. The financially strapped drugstore chain had 'been teetering on the edge of survival for some time,' one analyst told CNN.
Imports of pharmaceuticals are surging as manufacturers are looking to stockpile supplies ahead of expected tariffs.
Nineteen states are suing Robert F. Kennedy, Jr. over his restructuring of the Health and Human Services Department, arguing that it represents 'an unlawful effort to undercut the will of Congress.' MORE FROM FORBES Forbes 48 Great Colleges Here And Abroad That Are Still Accepting Applications By Emma Whitford Forbes Why Stablecoin Issuers Could Displace Japan And China As The Biggest Buyers Of U.S. Treasury Securities By Nina Bambysheva Forbes Inside The Waymo Factory Building A Robotaxi Future By Alan Ohnsman