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Jessica Hill / AP

Aetna announced this morning that its fourth-quarter profit dropped 57%, to $139 million. Most of the drop in profit was tied to an early retirement program Aetna offered last fall as a way to slash costs. The Obamacare exchanges dragged down its overall profitability, but Aetna's government programs, specifically Medicare, continue to rake in taxpayer-funded cash. Aetna's total revenue in 2016 was $63.2 billion, a 4.7% jump from 2015.

Why it matters: Even though Aetna's net profit shrank in the fourth quarter, analysts thought it could've been worse for the health insurance giant.

The bigger issue is figuring out what to do now that its proposed acquisition of Humana was struck down. Aetna continues to say it is considering an appeal, but it gave 2017 guidance as if it were a "stand-alone" company.

Some interesting Obamacare figures: Aetna had to pay $690 million into the Affordable Care Act's risk adjustment program, which is used to help out insurers that had the most expensive customers in the marketplaces. The insurer also expects to receive $465 million under the risk corridor program, based on results from 2014 through 2016. Aetna bailed on most of the exchanges, not because they weren't profitable, but because Aetna was trying to get approval for its Humana deal.

Go deeper

Updated 2 hours ago - World

North Korea claims latest missile test new weapon launched from submarine

North Korean state media claims the country's military fired this missile on Tuesday. Photo: Korean Central News Agency

North Korean state media announced that a detected ballistic missile launch off its east coast on Tuesday was a newly developed weapon test-fired from a submarine.

Why it matters: Pyongyang's latest in a series of recent missile launches into the sea happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

4 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.