Aetna threatened to leave ACA exchanges if DOJ tried to block Humana deal

A letter from Aetna CEO Mark Bertolini obtained by the Huffington Post appears to contradict the insurer’s stance that pulling out of 11 Affordable Care Act (ACA) exchanges wasn’t connected to the government’s antitrust lawsuit against its proposed merger with Humana.

Bertolini outlined the “likely consequences” of an antitrust lawsuit to the U.S. Department of Justice (DOJ) in the July 5 letter, saying the company has been supportive of the ACA, but has been operating at a loss on exchange business since the first open enrollment period. To continue accepting those losses, Bertolini said Aetna needs the “anticipated synergies” of merging with Humana.

“Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses,” Bertolini wrote. “Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.”

He said Aetna wouldn’t expand to an additional five states and reduce its exchange presence to no more than 10 states in 2017. The final move ended up going further, as the company announced Aug. 15 it would only offer exchange plans in four states.

When asked by HealthExec if the scaling back had anything to do with the DOJ lawsuit—which was filed 16 days after Bertolini’s letter—Aetna spokesman T.J Crawford said “this is a business decision based on higher than projected medical costs.”

When the Huffington Post reported on the contents of the letter, Crawford maintained it was financial results, not the lawsuit, that was the impetus for Aetna leaving exchanges.

“We gained full visibility into our second quarter individual public exchange results, which―similar to other participants on the public exchanges―showed a significant deterioration,” Crawford wrote. “That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year.”

At least one member of Congress isn’t buying Aetna’s explanation. U.S. Sen. Elizabeth Warren, D-Massachussets, pointed out Bertolini had called the exchanges a “good investment” as recently as April, and said the company’s tone changed only after the antitrust lawsuit was filed.

“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,” Warren said. “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.”

Several of the largest insurers, including Aetna’s merger partner Humana, have announced they’ll be scaling back their exchange business in 2017 after taking heavy losses. Insurers who remain are requesting larger increases in premiums, with the average rate request asking for a 24 percent hike for next year.

UCLA Center for Health Policy Research Director Gerald Kominski, PhD, had predicted large insurers would depart from the exchanges for political reasons.

“This is not a death spiral,” Kominski told HealthExec in June. “This isn’t being caused because the exchanges were flooded with really sick people, really high-risk people, [whom] insurers couldn’t handle. In fact, the evidence across most of the country is just the opposite, that the enrollment in the exchanges represent kind of a balanced mix of risk, much like you would expect in any insurance market. So this is more about trying to put pressure on Congress to continue additional subsidies that go directly to the insurers.”