Aetna CEO Letter Links Insurer’s ACA Pullback To Federal Lawsuit

Aug. 18--Aetna Inc. has linked federal opposition to its proposed $37 billion purchase of Humana Inc. to the insurer's decision to exit scores of public health exchanges, according to a letter from Chief Executive Mark Bertolini to a U.S. Justice Department official.

"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 (Affordable Care Act) small group losses," Bertolini wrote in a July 5 letter to Ryan Kantor, assistant chief of the antitrust division's litigation section in the Department of Justice.

The letter was published Wednesday by The Huffington Post following a Freedom of Information Act request.

Specifically, Bertolini said Hartford-based Aetna will "immediately take action" to reduce its presence in health exchanges next year if the Department of Justice sued to block the deal.

Attorney General Loretta Lynch announced July 21 that the Obama administration is suing to stop the deal and a separate $57 billion purchase of Cigna Corp. by Anthem Inc. The Department of Justice said the two deals would undermine competition and leave consumers with insufficient health care choices.

Aetna announced late Monday it would exit nearly 70 percent of the counties with public health exchanges, cutting the number of its Affordable Care Act patients by 20 percent of its total 838,000, or about 168,000.

In response to an investor analyst who asked on a conference call Aug. 2 if the future of Aetna's position in public health exchanges would have an impact on discussions with the Justice Department about the Humana deal, Bertolini kept the two matters separate.

Any move by Aetna to cut health exchange losses was "really a balance sheet discussion," he said.

Some analysts have seen a tie between Aetna's drive to buy Humana and the Obama administration's interest in promoting the health exchanges in the Affordable Care Act, President Obama's signature domestic legislation.

T.J. Crawford, a spokesman for Aetna, said Wednesday that Bertolini's letter was in response to a request from the Department of Justice and provided "our views on the potential impacts to our individual public exchange business should the Humana transaction be blocked."

"We indicated that there would indeed be an impact, which should not come as a surprise," he said.

Crawford cited the loss of cost savings achieved by combining Aetna and Humana and a $1 billion break-up fee if the deal falls through.

Since that response, the public health insurance exchanges have shown a "significant deterioration," Crawford said.

"That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year," he said.

In a letter from the Justice Department provided by Crawford, federal officials demanded that Aetna provide details about its proposed acquisition of Humana and what impact it might have on its participation in Affordable Care Act exchanges.

Aetna has been feeling political heat. Sen. Elizabeth Warren, D-Mass., posted on Facebook last week that although Aetna "has every right" to wage a court battle against the Justice Department over the Humana deal, "violating antitrust law is a legal question, not a political one."

"The health of the American people should not be used as bargaining chips to force the government to bend to one giant company's will," she said.

Rep. Frank Pallone Jr., D-N.J., and ranking member of the House Energy and Commerce Committee, said Aetna's decision to exit the exchanges "puts profits over people."

"I'm troubled by reports that this announcement could be in retaliation to the Justice Department's decision last month to file a lawsuit to block a merger between Aetna and Humana," he said.

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