CEO Says Aetna Will Stay In ACA Marketplace In 2018

Feb. 02--Aetna CEO Mark Bertolini said during a conference call with investors Tuesday that he is optimistic about "the next wave of health care reform," and what he called "the evolving health care policy landscape."

Bertolini was once a booster of the Affordable Care Act, commonly known as Obamacare. Tuesday, he said that "in spite of the best intentions of Washington and industry, millions of Americans remain uninsured."

Aetna lost $450 million selling individual policies last year, including those sold through Obamacare exchanges, and he said collectively, companies have lost billions of dollars, and most of the non-profit companies started through the legislation have failed. In a later interview with CNBC, he noted the losses were $100 million greater than Aetna projected.

Aetna had about 965,000 people covered by individual policies at year's end, and this year, after withdrawing from most of the places it had been selling, it expects to have 240,000 individual customers, with 190,000 of them on the Obamacare exchanges.

Health insurance experts have said that the uncertainty about what comes after Obamacare will result in a collapse in the market in 2018, because insurers have to decide how to price those policies before September this year. In comments Tuesday, Bertolini initially seemed to confirm that view.

Aetna, meanwhile, reported a $215 million after-tax cost for restructuring in a filing with the Securities and Exchange Commission Tuesday. The same filing said that Aetna's full-year profits fell 5 percent compared to 2015.

Aetna said the drop was "primarily due" to the cost of a voluntary early retirement incentive and costs related to a proposed merger with Humana that was recently blocked by the U.S. Department of Justice.

Aetna reported Tuesday that full-year net income was $2.3 billion compared with $2.4 billion for full-year 2015. The fourth quarter net income was $139 million, or 39 cents a share, compared with $321 million, or 91 cents a share in the same period of 2015.

Excluding these one-time costs, earnings were $1.63 a share for the fourth quarter, beating analysts' expectations of $1.44 per share.

The restructuring charge was associated with an early retirement program that was instituted in October. The company has declined to say how many people are exiting as a result of the program.

"We've had a pretty concerted effort to try to drive sustainable productivity gain," said Shawn Guertin, Aetna's chief financial officer, during a conference call with investors Tuesday. "That's not one-time unique to 2017, this is really part of our ongoing approach to the business."

Aetna's Connecticut presence -- despite its sprawling Hartford headquarters -- has fallen by 25 percent over the last 15 years. In 2001, Aetna had 8,115 Connecticut employees. Before this round of cuts, the company said it had 6,000 workers in the state. Although Hartford is the headquarters, it no longer has the greatest concentration of employees. More Aetna workers are based in suburban Philadelphia.

Aetna is the third-largest insurance employer in Hartford, after Travelers and The Hartford.

Bertolini said Aetna is talking with lawmakers, and is optimistic that the replacement for Obamacare will be affordable, will be consumer-focused, and will focus on quality.

"Preserve the good parts of the ACA," he said, adding that the replacement also needs funding that encourages more young people to buy insurance plans.

In the CNBC interview, he criticized one Republican idea that allowing companies to sell health insurance across state lines would drive down costs.

"Quite frankly, the idea of selling insurance across state lines is a dated concept. Insurance products are now tightly aligned with networks," he said. He said it wouldn't be useful for someone to have a network of doctors and hospitals that are far from where they live.

He said Aetna wants to see "access to affordable, quality health care to all Americans."

On Bloomberg TV, he said, "It's easy to repeal, but the replacement has to be very carefully considered. There's a lot of opportunities to get it right, and we need to be part of that."

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