Dive Brief:

Humana announced plans to exit most of ACA exchanges in 2017 in updated guidance to investors Thursday.

The decision comes as Humana reported better than anticipated second-quarter results for its Individual Medicare Advantage and healthcare services businesses.

The Louisville-based insurance giant said it will continue assess its 2016 ACA business for any impact on its premium deficiency reserve, which is expected to increase by about $208 million pretax in the second quarter.

Dive Insight:

Yesterday, The U.S. has filed suit to block Humana's pending merger with Aetna.

“The company has … notified relevant DOIs [Departments of Insurance] of its intent to discontinue certain on-exchange individual products across a number of geographies for 2017 and exit substantially all Affordable Care Act (ACA) compliant off-exchange individual markets,” the company said.

The move will shrink Humana’s geographic presence for its individual plans to no more than 156 counties in 11 states — down from 1,351 counties in 19 states this year.

In May, Humana said it would exit the Alabama and Virginia ACA marketplaces, citing a 21% drop in ACA coverage enrollees in the 2016 first quarter.

Premiums for ACA-compliant offerings are expected to drop to between $750 million and $ billion in 2017, down from $3.4 billion this year, the insurer said.

Pretax earnings for the company’s individual Medicare Advantage business totaled about $185 million, bolstered by favorable medical claims development in the prior period and lower current-yield utilization than anticipated in pricing, Humana said.

The company attributed the higher projected returns in healthcare services — roughly $62 million pretax — to higher mail-order penetration in the pharmacy business.