Aetna Warned DOJ Challenge of Humana Merger Would Result in ACA Withdrawal

In a letter issued to the U.S. Department of Justice, Aetna threatened to withdraw from Affordable Care Act exchanges should the company be blocked from acquiring Humana.

Last week, the health insurer announced that it would cut its participation in Affordable Care Act (ACA) public exchanges by nearly 70%, leaving exchanges in only four states: Delaware, Iowa, Nebraska and Virginia.

Mark T. Bertolini , chairman and CEO of Aetna, wrote that any challenge would leave the company "with no choice but to take actions to steward its financial health," in the letter, which was sent on July 5 and later obtained by reporters at The Huffington Post.

"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. We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction... we will not be able to expand to the five additional states."

He continued: "In addition, we would also withdraw from at least five additional states where generating a market return would take too long for us to justify, given the costs associated with a potential break up of the transaction. In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states. We also would not be in a position to provide assistance to failing cooperative exchanges as we did in Iowa recently."

Bertolini wrote that that it would be likely that Aetna leave the public exchange business entirely.

"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 (which are larger than we had planned for when announcing the deal) to supporting even more public exchange coverage over the next few years."

Bertolini concluded by reiterating that any investment decisions will depend on their anticipated merger with Humana.

"The reality is that our continued ability to participate in the public exchanges under the ACA is ultimately dependent on our ability to continue to invest in the market development of exchange plans in terms of both startup costs and losses," he wrote.

The DOJ sued to block Aetna's acquisition of Humana, as well as Anthem's acquisition of Cigna, at the end of July.

Sen. Bernie Sanders, I-Vt. issued a statement following Aetna's announcement that it was withdrawing, calling the situation "disappointing" and denouncing the company for being "more concerned with making huge profits than ensuring access to health care for all Americans."

“In my view, the provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible," Sanders wrote. "That is why we need to join every other major country on earth and guarantee health care to all as a right, not a privilege. That is also why we need to pass a Medicare-for-all single-payer system. I will reintroduce legislation to do that in the next session of Congress, hopefully as part of the Democratic Senate majority." – by Chelsea Frajerman Pardes

Reference:

Cohn J, Young J. Aetna CEO Threatened Obamacare Pullout If Feds Opposed Humana Merger. The Huffington Post. Accessed August 22, 2016.

Sanders Statement on Aetna's Decision to Withdraw from Health Insurance Exchanges. Bernie Sanders website. Accessed August 22, 2016.