U.S. Senator Elizabeth Warren
Last week, Aetna – one of the nation’s largest health insurers – unexpectedly announced that it would reevaluate its participation in the Affordable Care Act health care exchanges. Aetna has always had concerns about Obamacare, but as recently as April, the company said its ACA business was "a good investment." In May, Aetna announced plans to expand to more states. Last week, Aetna reported second-quarter earnings that beat expectations.
So what changed? In July, the Justice Department announced that it would sue to block Aetna’s merger with another health insurance company because it would create monopoly-like conditions that reduce competition and drive up insurance costs. Aetna says this change of tone about the Affordable Care Act has nothing to do with the merger – but some analysts have suggested that Aetna might "use its future participation in the exchanges in bargaining over its purchase of Humana."
Aetna may not like the Justice Department’s decision to challenge its merger, and it has every right to fight that decision in court. But violating antitrust law is a legal question, not a political one. The health of the American people should not be used as bargaining chips to force the government to bend to one giant company’s will.
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Last week, Aetna – one of the nation’s largest health insurers – unexpectedly announced that it would reevaluate its participation in the Affordable Care Act health care exchanges. Aetna has always had concerns about Obamacare, but as recently as April, the company said its ACA business was "a good investment." In May, Aetna announced plans to expand to more states. Last week, Aetna reported second-quarter earnings that beat expectations.
So what changed? In July, the Justice Department announced that it would sue to block Aetna’s merger with another health insurance company because it would create monopoly-like conditions that reduce competition and drive up insurance costs. Aetna says this change of tone about the Affordable Care Act has nothing to do with the merger – but some analysts have suggested that Aetna might "use its future participation in the exchanges in bargaining over its purchase of Humana."
Aetna may not like the Justice Department’s decision to challenge its merger, and it has every right to fight that decision in court. But violating antitrust law is a legal question, not a political one. The health of the American people should not be used as bargaining chips to force the government to bend to one giant company’s will.
Obama's Preference For Single Payer Healthcare (Video)
It’s time: Hillary Clinton must push to make the public option a reality
Aetna's decision to exit Obamacare exchanges is a reminder that the U.S. must take the next step in health care
In a move that will almost certainly help cement the public’s view that health insurance company executives are greedy, amoral ogres, Aetna announced this week that it is pulling out of multiple Obamacare exchanges, forcing nearly a million customers across 11 states to find new insurance in markets where their options will have been greatly reduced.
Now, refusing to participate in the exchanges is not by itself a greedy and amoral move. Obamacare is premised on keeping the free market as a major driver of America’s health insurance system, as opposed to adopting some version of single payer. If a health insurance provider finds participating in the exchanges to be an unacceptable drain on its profits, it is free to stop doing so.
What makes Aetna’s move stink is the possible reason for it, as reported by the Huffington Post:
But the move also was directly related to a Department of Justice decision to block the insurer’s potentially lucrative merger with Humana, according to a letter from Aetna’s CEO obtained by The Huffington Post. […][I]n 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.
In a nutshell, Aetna and Humana had announced a $33-billion merger in July of 2015, pending regulatory approval. Last month, the Justice Department sued to block it on the grounds that merging two of the nation’s five largest insurance providers was an antitrust violation that would strangle competition in the marketplace.
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In response, Bertolini sent the letter threatening to pull out of the markets. When the DOJ didn’t cave, Aetna went ahead and announced it will do just that.
It is hard to say how much of this is genuine worry about the combined companies’ financial viability and how much of it is hard-nosed, high-level negotiation. As Nicholas Bagley pointed out, firms will bluster about this sort of thing, and regulators have to walk a fine line between listening to their concerns while keeping them honest. For example, while Aetna might be telling the truth about financial viability in some markets, one of the 11 exchanges it is dropping (out of 15 the company participates in) is Pennsylvania, where the company actually made a nice profit last year.
What is beyond dispute is that nearly a million people are about to lose their health insurance and be thrown back onto the exchanges. With Aetna gone and competition reduced, those people could find themselves forced to buy even more expensive plans with reduced coverage.
What is beyond dispute is that nearly a million people are about to lose their health insurance and be thrown back onto the exchanges. With Aetna gone and competition reduced, those people could find themselves forced to buy even more expensive plans with reduced coverage.
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