Aetna CEO Says Congress Must Fix ACA
Aug. 04--HARTFORD -- Aetna Chief Executive Officer Mark Bertolini said Thursday it was time for Congress to find a bipartisan fix for the troubled Affordable Care Act.
"The ACA cannot be repealed. Period. End of sentence," he said in an interview on CNBC. "They don't have the votes in the Senate."
"It's really easy to fix this if they would just get over the politics of who's going to win the '18 election," he said Thursday.
Bertolini's comments came after Aetna reported a sharply higher second-quarter profit after pulling out of most Affordable Care Act exchanges last year. Aetna expects to lose $225 million in ACA markets this year and lost $300 million last year, Bertolini said.
Aetna's net income for the April-June period was $1.2 billion, or $3.60 per share, an increase of 52 percent over last year's second quarter, soundly beating Wall Street expectations.
By 2018 Aetna will have pulled out of all exchanges under the Affordable Care Act, which is also known as Obamacare. "We are waiting for clarity to decide whether or not we re-enter that market," Bertolini told CNBC. "Until we agree we need to fix it and get the Democrats involved, this thing isn't really going to get fixed.''
The larger issue, Bertolini said, is uncertainty created by a deadlocked Republican-led Senate that has failed to keep GOP promises for seven years to repeal the law.
"Any business that has the kind of changes this program has seen quarter over quarter, sometimes monthly, would not be able to sustain their business practices for any period of time," he said.
In a conference call with investor analysts earlier in the day, Bertolini said the uncertainty created by the Republican-controlled Congress extends to consumers.
"You have individuals who are sitting there with coverage not knowing whether they'll have it next year," he said.
Among the uncertainties is whether the federal government will continue to pay "cost sharing reductions" to insurance companies. These federal payments reduce the amount paid by consumers for deductibles, co-payments and coinsurance.
President Donald Trump has prodded the GOP majority in the Senate to repeal the ACA. "Let Obamacare implode," he said in a July 28 speech after Republican senators failed to repeal the law.
Last weekend, Trump tweeted that these cost sharing reductions were bailouts that will end "very soon."
Bertolini said calling the payments bailouts is "misinformed."
"It's the costs that need to be paid to hospitals and doctors that otherwise wouldn't be paid," he said. "Therefore, people wouldn't be able to afford their coverage."
Bertolini has in the past criticized partisanship in the health care debate. In May, he told CNBC that government should fund programs providing financial protection to insurers with high-cost patients and help lower out-of-pocket health expenses for low-income customers.
During the coming year, Aetna will realize the benefits from pulling out of costly Obamacare markets, Credit Suisse analyst Scott Fidel said. In a note to investors he said Aetna "should significantly reduce" the $200 million to $250 million in expected losses this year as it exits ACA exchanges.
Aetna announced in May it will not offer on- or off-exchange individual plans in Delaware or Nebraska in 2018. It previously announced it will not offer plans in Iowa and Virginia next year.
On Thursday Aetna reported that revenue of $15.52 billion was down about 3 percent from the second quarter of 2016, but still beat expectations of analysts surveyed by Bloomberg.
Aetna raised its 2017 earnings per share guidance to a range of $9.45 to $9.55, from a previous projection of $8.80 to $9. That outpaces analysts' expectations of $8.99.
Aetna attributed the increase in earnings to a continued strong performance in its core health care segment. The business unit includes insured and self-insured medical, pharmacy, dental and behavioral health products and services.
Aetna also demonstrated it can succeed without Humana Inc., which it unsuccessfully sought to buy last year for $37 billion. Medicare Advantage products were a "primary driver of growth," accounting for a 14 percent increase in membership this year, Bertolini told investor analysts. The products are popular private insurance offerings that handle Medicare coverage for seniors.
Aetna will offer products in 60 percent of Medicare Advantage markets next year, up from 56 percent.
Medicare Advantage was a key reason why Aetna sought to buy Humana, which has a significant presence in Medicare Advantage markets. A federal judge blocked the deal in January.
Aetna's ability to reap profit from Medicare Advantage "really crystallizes the logic behind the strategy" to buy Humana, said Spencer Perlman, managing partner and director of health care research at Veda Partners in Bethesda, Md.
In contrast, it was unable to make a go of the Affordable Care Act Exchanges, he said. "It's never been Aetna's sweet spot," Perlman said.
Aetna's share price jumped 2.5 percent, closing at $158.54 on the scond-quarter profit increase.
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