Aetna, America’s third largest health insurer, has decided to drop out of the Obamacare exchanges in 11 of the 15 states it was participating in. The Obama administration is attempting to block a deal between Aetna and Humana that would give the merged entity more pricing power with customers and providers. Aetna had warned the administration that if the deal was blocked, it wouldn’t be able to continue servicing Obamacare exchanges in many states. Ann Wilde Mathews covers the story for The Wall Street Journal:
Aetna wouldn’t be the only insurer to link its exchange position to a hoped-for deal. Anthem Inc. has publicly said that if it is able to consummate its acquisition of Cigna Corp., a combination that is also facing a Justice Department suit, the merged company would likely expand into nine new exchange states.
In a July 5 letter to the Justice Department, reviewed by The Wall Street Journal, Aetna said that if the Humana deal drew a legal challenge, “instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states.” In addition, the letter, signed by Aetna Chief Executive Mark T. Bertolini, said the insurer believed “it is very likely that we would need to leave the public exchange business entirely and plan for additional business efficiencies should our deal ultimately be blocked.”
The company said in the letter that an antitrust suit or a successful prevention of its deal would create financial strains that would force it to pull back from the exchanges, where it was losing money. “Although we remain supportive of the Administration’s efforts to expand coverage, we must also face market realities. Our customers expect us to keep their insurance products affordable and continually improving, and our shareholders expect that we will generate a market return on invested capital for them,” the letter said.
It should be no surprise that after the Obama administration made the health care industry one of the most regulated in America, that there would be fallout among insurers trying to remain profitable.
