Consumers may remember back in August when Aetna, a health insurance provider, said it would be pulling out of Obamacare exchanges in many states in 2017. At the time, CEO Mark Bertolini expressed regret over the decision, saying that the company had faced increased pressure and was concerned about the sustainability of its exchange business.
However, new details about the company’s withdrawal from these exchanges seem to paint a very different story.
A new report by the Los Angeles Times shows that Aetna’s reasons for pulling out of the exchanges may have had less to do with losing too much money and more to do with following through on its threats. Federal judge John D. Bates found that the company made the decision at least partly because of an antitrust suit that blocked its $37 billion merger with Humana.
Bates found that Aetna had threatened federal officials with pulling out of the Obamacare exchanges if the suit went forward. When it did, Aetna followed through on its threat and announced pullouts in 11 of the 15 states it previously covered. Bates made these observations as a part of a ruling he issued on Monday that blocked the merger between Aetna and Humana.
“Aetna tried to leverage its participation in the exchanges for favorable treatment from the DOJ regarding the proposed merger,” Bates said in his decision.
“Outside of normal business practice”
Aetna allegedly did all that it could to keep its real reasons for pulling out of the exchanges quiet; executives elected to exclusively talk about the matter over the phone instead of email in order to not leave a paper trail. Anything that was written down was covered by client-attorney privilege, something Bates said came close to malfeasance.
When Aetna announced that it was pulling its coverage of many states and counties, it surprised quite a few people because many of the areas had actually shown profitability. In fact, Bates said that the move was “so outside of normal business practice” that one top executive couldn’t make heads or tails of the decision.
“I just can’t make sense out of the Florida dec[ision],” said Christopher Ciano in a message to Jonathan Mayhew, Aetna’s head of the national exchange business. “Based on the latest run rate data . . . we are making money from the on-exchange business. Was Florida’s performance ever debated?”
Mayhew quickly told Ciano to discuss the matter over the phone with him, ending the written dialogue.
Improving litigation position
Aetna’s rationalization for pulling out of the exchanges is degraded further by a letter that Bertolini sent to the Justice Department in July. In the message, the CEO plainly ties the company’s future support of the exchanges with whether its Humana merger was successful.
Additionally, at least 17 of the counties that the company pulled out of were areas that the DOJ claimed had “unlawfully low levels of competition in individual exchanges.” By pulling out of the areas, Aetna could claim that it had no ties to the areas to strengthen its merger argument.
“The evidence provides persuasive support for the conclusion that Aetna withdrew from the on-exchange markets in the 17 complaint counties to improve its litigation position. The Court does not credit the minimal efforts of Aetna executives to claim otherwise,” said Bates.
Cause and effect
While Bates conceded that Aetna’s claim of losing money on the exchanges may be valid, he questioned the company’s claims that it was the only reason for pulling out. Exchanges with Aetna executives provided evidence that the merger deal and the pullouts were linked for the company, despite claims to the contrary. But what does that decision ultimately mean for the rest of us?
In its report, the Times points out that Aetna’s departure from the exchanges gave Republicans a platform from which they could cast doubt on the stability of Obamacare, strengthening the case for repealing the act.
Depending on how much you’re willing to heap on the company, one could allege that its actions put the health coverage of over 20 million Americans who rely on the program at risk. However, whether its decision will ultimately help the company achieve its own ends is now less sure.