Aetna Executives Defend Pulling Out of Some ACA Exchanges
December 12 2016 - 4:56PM
Dow Jones News
By Brent Kendall and Aruna Viswanatha
WASHINGTON -- Aetna Inc. executives on Monday jousted with
Justice Department lawyers over the health insurer's reasons for
sharply cutting its participation in Affordable Care Act exchanges,
a potentially important issue in the antitrust trial over Aetna's
proposed merger with Humana Inc.
The Justice Department, which sued in July to block the $34
billion Aetna-Humana combination, argues the deal would suppress
competition for private Medicare plans, as well as the sale of
individual insurance policies on ACA exchanges in 17 counties
covering three states: Florida, Georgia and Missouri.
Aetna in August pulled out of exchanges in 11 states, including
the areas covered by the Justice Department lawsuit. The government
argues Aetna withdrew solely in an attempt to avoid those antitrust
claims, but the insurer says its decision wasn't
litigation-driven.
Aetna Chief Executive Mark T. Bertolini, in testimony that began
late Friday and resumed Monday, said the company pulled back from
its exchange presence for business reasons, namely accelerating
financial losses that could reach $350 million for 2016.
Three other high-ranking Aetna executives took the witness stand
and said that if the decision had been up to them they would have
withdrawn Aetna from the exchange business entirely. That business
"has continued to deteriorate as the year has progressed," said
Jonathan Mayhew, who heads Aetna's exchange business.
The Justice Department introduced as evidence internal company
communications in which Aetna officials specifically discussed what
the insurer should do about its exchange business in the 17
counties identified in the lawsuit. And at least one email exchange
appeared to show Aetna officials troubled by the move to pull out
of Florida because they weren't sure it was a good business
decision.
Mr. Mayhew at one point acknowledged on the witness stand that
he had been told to keep strategy discussions about the 17 counties
verbal so there wouldn't be written communication that could be
shared with the Justice Department during discovery for the
litigation.
In addition to questions about the exchanges, Aetna's Mr.
Bertolini touched on a variety of topics during his second day of
testimony Monday.
The Aetna CEO said Molina Healthcare Inc., which is line to buy
Medicare assets from Aetna and Humana for $117 million if the
merger is approved, had the capability to be successful with those
assets and be a competitor in that market. Aetna has argued the
Molina deal would address any antitrust concerns with the
merger.
The Justice Department has argued that Molina, which is much
smaller than Aetna or Humana, would be unable to replace the
competition lost from the merger.
Mr. Bertolini also said he had "high expectations" that he would
be able to deliver on Aetna's vision that the merger with Humana
would produce more than $3 billion in cost savings and
efficiencies.
Justice Department lawyer Craig Conrath in response asked a
series of questions designed to show that Mr. Bertolini and Aetna
didn't need the merger to move forward with cost-savings
initiatives that could make the insurer more efficient.
The case is one of two currently unfolding in Washington, D.C.'s
federal courthouse in which the Justice Department in challenging
major health insurance mergers. The department also is suing to
block Anthem Inc.'s $48 billion deal to acquire Cigna Corp.
Write to Brent Kendall at brent.kendall@wsj.com and Aruna
Viswanatha at Aruna.Viswanatha@wsj.com
(END) Dow Jones Newswires
December 12, 2016 17:41 ET (22:41 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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