Aetna Tu, Brute? Con't

Yesterday I speculated that the obvious timing of health insurance company Aetna pulling out of Obamacare exchanges in 11 states indicated the move was political revenge for the Justice Department suing to block Aetna's planned buyout of Humana last month.  One of the places Aetna is pulling out is here in NKY, meaning less competition and higher premiums, so I've got skin in this game too. It stank from the beginning, especially given Aetna's plans in May to expand coverage.

Today we find out that political revenge theory is exactly what happened as Jonathan Cohn over at HuffPo drops this story on Aetna CEO Mark Bertolini.

Publicly, Aetna representatives this week framed their about-face as a reaction to losses the company was taking on Obamacare customers, and in particular figures from the second quarter of 2016 that the company had just analyzed, showing them to be sicker and costlier than predicted. 

When reporters on Monday asked whether Aetna was also reacting to the administration’s attempt to thwart its merger with Humana, company officials brushed off the questions, according to accounts in the Hartford Courant, Politico, and USA Today. 

But just last month, in a letter to the Department of Justice, Aetna CEO Mark Bertolini said the two issues were closely linked. In fact, he made a clear threat: If President Barack Obama’s administration refused to allow the merger to proceed, he wrote, Aetna would be in worse financial position and would have to withdraw from most of its Obamacare markets, and quite likely all of them. 

Bertolini penned the letter, which The Huffington Post obtained through a Freedom of Information Act request, on July 5 ― 16 days before the Justice Department announced it would fight the Humana deal. The department had asked Aetna how, if at all, a decision on the proposed merger would affect Aetna’s willingness to offer insurance through the exchanges. 

Bertolini responded bluntly. Aetna supported the law’s goal to expand coverage and planned to increase its exchange offerings next year, in the hopes that the exchanges would stabilize as enrollment grew, he wrote. 

But if the Justice Department were to block the merger, Bertolini warned, Aetna could no longer sustain the losses from its exchange business, forcing it sharply change direction:


[I]f the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint .... [I]nstead of expanding to 20 states next year, we would reduce our presence to no more than 10 states .… [I]t is very likely that we would need to leave the public exchange business entirely and plan for additional business efficiencies should our deal ultimately be blocked. By contrast, if the deal proceeds without the diverted time and energy associated with litigation, we would explore how to devote a portion of the additional synergies ... to supporting even more public exchange coverage over the next few years.

So yes, Bertolini has made good on his threat, and he's put the health insurance coverage for millions of people in possible jeopardy as a direct result. Aetna still expects to make billions in profit in 2016, so the notion that the exchanges were hurting the company was always nonsense.

Richard Mayhew over at Balloon Juice calls BS on Aetna as well, using Pennsylvania as an example. Aetna says it has to pull out of the state because it's losing money on the individual market, including Obamacare exchange plans.  Filings to the state's insurance regulators prove otherwise:

Aetna was profitable in 2015 in the individual market in Pennsylvania. It is projecting to be profitable in 2017. The filing memo was drafted in late May and submitted to the Pennsylvania regulators in early June. Conditions have not changed enough to make Pennsylvania a money loser in under two months. 

My wee bit of cynicism bears fruit. Aetna is trying to logroll an anti-competetive merger with on-Exchange political consequences. If it works for Aetna/Humana it burns a bridge to get the merger, and if it fails, it puts Aetna on the shitlist of any Democratic administration. That is a very interesting strategy when it is highly likely that there will be another Democratic administration.

But the strategy makes sense if the goal is to not have another Democratic administration, you see.

So now we have evidence that health insurance companies are actively trying to sabotage Obamacare anyway and maybe even trying to hurt the Democrats as punishment.

So what will the Obama administration do about it?

We're about to find out.