Bribery or Blackmail? Aetna Takes its Toys and Goes Home

By Jill Zorn

business_people_fighting_over_some_us_money1.jpgYesterday, the Huffington Post published a scoop on why insurance giant Aetna may have chosen to pull out of almost all of the Affordable Care Act (ACA) health insurance marketplaces where they currently compete.

Reporters Jonathan Cohn and Jeffrey Young obtained a letter written by Aetna in response to a Freedom of Information Act request, answering questions posed by the Department of Justice (DOJ) as they continued their anti-trust investigation into Aetna’s proposed merger with Humana.  DOJ wanted to know if Aetna might alter their plans to compete in the exchanges, should their merger plans be rejected by the Department.

Here is an excerpt from Aetna’s response to that question:

“[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 …. 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.”

If DOJ played nice and decided not to contest the merger, Aetna would continue to be a constructive partner, perhaps even expanding their participation.  But if DOJ played hardball, then Aetna would play hardball, too, and take their toys and go home.000682-0001-001856.jpg

As Vox’s Ezra Klein stated in his on-line discussion with Sarah Kliff, this response can be viewed in two ways:  “ One is that Aetna would have liked to stay in but needed to make good on their threat. The other is they wanted to leave but could have been kept in by the lure of the merger.”

Or, to put it more crudely, was this blackmail or bribery or both?

Before the Huffington Post investigative piece dropped, health wonks, financial analysts and journalists had been analyzing Aetna’s decision to pull out of all but four marketplaces.  What did this decision mean about the overall health of the ACA marketplaces?  All kinds of contradictory information was out there:

The reality is, in some states and regions within states, the marketplaces and the insurers that compete in them are doing well.  In other states, there is far from robust competition.

Like any huge undertaking, the ACA is far from perfect but it is way too early to declare it a failed program.

Certainly, if attempts to make needed improvements are dependent on Congressional agreement, making needed adjustments could be extremely challenging.

But an even more fundamental problem with the exchanges may be the fact that for-profit insurers, answerable to shareholders first and foremost, do not make for reliable partners when it comes to guaranteeing a public good like health care for all Americans.

As Ezra Klein stated in the earlier cited Vox on-line discussion,

“ basing your system around managed competition between private insurers means you are in bed with private insurers — dependent on their cooperation, and so incentivized to help them succeed.”

Or as Wendell Potter put it recently, “It’s way past time for us to stop deluding ourselves about private health insurers.”

Public option anyone?????

This entry was posted in From the Foundation, Jill Zorn and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s