The big news in healthcare circles this week is the connection between Aetna’s planned exit from 15 out of 19 state health insurance exchanges where it does business and the Justice Department’s lawsuit blocking Aetna’s merger with Humana. Thanks to Huffington Post reporters, a private communication from Mark T. Bertolini, the Aetna CEO, to the U.S. Justice Department was exposed. This letter revealed a clear warning to the Justice Department—
“…if 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.”
The “public exchange” is the Health Insurance Marketplace where the previously uninsured have been able to buy affordable health insurance since 2014. The Justice Department refused to back off and Aetna followed through on its threat. To the individual American, the connection between Aetna exiting Exchange markets in 2017 and separate actions by the Justice Department is troubling on many fronts. This glimpse into the behind-the-scenes world of gamesmanship played out by members of HICUP (BB Brigade acronym for those who are engaged in the business of health care in the USA) affects the lives of every American, not just those directly impacted by the Aetna exit from the Exchange.
Mr. Bertolini goes on to say that Aetna exiting Exchange markets in 2017 is “due to lower than initially expected enrollment, a population that is older and sicker than initially projected”, This points the finger of blame at the risk pool composition and size. The news media is all too quick to turn this into a simple cause and effect relationship (i.e, cause: too many sickly people buying health insurance on the Exchange; effect: Aetna must leave this market). The more accurate interpretation of Mr. Bertolini’s words shows that Aetna is having trouble “projecting” how they should price their premiums (called medical underwriting) for the risk pool on hand. The individuals who are buying health insurance are not to blame for Aetna exiting Exchange markets!
Pricing premiums accurately for any given risk pool is the business of health insurance and if Aetna is not being successful in their business practices, they need to make internal changes and not burden “Dear Ryan” at the Justice Department with them. I could guess that this “sickly” risk pool was not a problem before Obamacare (PPACA) reforms gave individuals in the non-group health insurance market (on and off the Exchange) guaranteed issue rights. Under guaranteed issue rights, individuals could no longer be denied health insurance coverage for pre-existing conditions, be charged exorbitant premiums because of health problems (or high health spending) in the past, and suffer reduced and flimsy coverage where pre-existing conditions were excluded.
The high, unaffordable costs of health care are demanding many changes in the business of health insurance. Mr. Bertolini (and every other insurer) would love to cherry-pick healthy beneficiaries that use little to no healthcare services, but still charge the highest premiums they can get away with. Those days are fast disappearing. Health insurers need to adapt and get over the fact that the days of outsized profits and bonuses are things of the past. Obamacare (PPACA) reforms are forcing health insurance companies to compete on the value of their products and the efficiency of their organizations rather than on their ability to identify and subdivide people based on their risk of incurring covered healthcare costs. Some insurance companies will accept the changes and adapt to the new conditions of doing business—others that cling to the past will suffer the consequences.
The Aetna CEO chose his intended threat with precision. Aetna did not threaten to leave the Medicare market where it sells Medicare Advantage and Medigap plans. Medicare beneficiaries have median healthcare spending that is more than four times the spending for people under the age of 65. As Obamacare’s signature initiative, the Health Insurance Marketplace is the foundation for bringing health insurance to the uninsured. Only in its 3rd year of operation and still ironing out the details for success, the Exchange marketplace is more vulnerable. There are several political groups openly opposing healthcare reform of any kind and Obamacare (PPACA) specifically. Perhaps Aetna should have threatened to leave its profitable Medicare markets where “sickly” beneficiaries are concentrated. Do you think the Justice Department would have paid more attention?
As an individual American and someone who does not buy health insurance on the Exchange, the Aetna letter from its corporate CEO to our Justice Department bothered me in many ways . This CEO is not some Mafia thug threatening a shop owner with harm if he doesn’t pay up. Mr. Bertolini is a smart, successful, and powerful man who had the hubris to believe that such a threat might influence our government in his corporation’s favor. Many questions come to mind as I read Mr. Bertolini’s letter:
- Is this corporate influence on our legal system business-as-usual and Mr. Bertolini was only unlucky that the behind-the-scene gamesmanship was made public?
- Is there a cushy corporate job lurking in the future for “Dear Ryan” if he had sided with Aetna?
- Are the interests of the American people, who don’t know “Dear Ryan”, always secondary?
- If the Aetna/Humana merger had been allowed to proceed as a result of the threat, would the too-big-to-fail Aetna/Humana behemoth follow up with higher premiums and bolder threats?
- If the present administration had been strong Repeal Obamacare (PPACA) advocates, would the Justice Department’s actions have been different?
- How many of these coercive communications (written and oral) favoring corporate aims succeed?
Our Justice Department should not make legal decisions based solely on the impact their actions might have on one corporation’s supposed financial health. When an individual loses his job because of market conditions or globalization, he does not expect the government to hand him a job or threaten retaliation if he doesn’t get one. He is expected to adjust (relocate) or improve his marketability (through education). I expect companies to do no less. I hate when businesses threaten our government with “jobs will be lost” if they do not get special treatment. Our government’s job is to look at the big picture and decide what is best for the American people as a whole.
As a final note…while my opinions above defend the concept of providing affordable health insurance to all Americans, they should not be interpreted to mean that I wholehearted endorse all aspects of how health insurance is provided to the individual Americans who make up the non-group health insurance market. The Exchange represents the politically acceptable solution to bringing health insurance to the uninsured and better solutions should always be investigated. Aetna’s actions should invite out-of-the-box thinking with the big picture in mind and should not result in government actions that benefit the insurance companies over individual Americans. Government bureaucrats tweaking individual program details are not in a position to bring the best solutions to light–individual Americans must become engaged. While I am thankful that Aetna’s threat did not stop the Justice Department’s lawsuit from going forward, I cannot help feeling that Aetna should be penalized for even making such a threat. If I had an Aetna individual health plan, I would change plans if at all possible. Join me to see how else we can make a difference.