Aetna will drop out of health insurance exchanges if they are not profitable enough [View all]

[eridani]

http://investor.aetna.com/phoenix.zhtml?p=irol-eventDetails&c=110617&eventID=48891183
Q1 2013 Earnings Conference Call
Mark Bertolini - Chairman, CEO and President, and Shawn Guertin - Chief Financial Officer

Guertin: On the individual and small group, it is not a function of irrational pricing in any way, shape or form. We've talked before about the importance of having solid operating margins going into 2014, and so we have continued to err on the side of caution in our pricing on that product. And as I mentioned we'll favor sort of margin over membership on this.

Bertolini: We are entering these exchanges very carefully. We are about two-thirds of the way contracted for our exchanges. Those tend to be narrow networks that are generally 25 to 50 percent of the size of our base networks in those marketplaces. Currently the rates we're getting for most of those networks is between Medicare and commercial, based on the narrower networks, the closer we get to Medicare. The rates will really be based on geography and probably, more importantly, will be based on how much we get the network contracted. So our approach in the initial pricing that we've submitted to the exchanges has been focused on where we have rates on a document inked. We've included those into our cost structure. Where we do not, and we need to add providers for network sufficiency, we're pricing those at commercial pricing until we otherwise know that we have a betterrate. And, as you know, the negotiations will take place through the summer and into the fall. Obviously, at the end of all of this, we have an opportunity to pull out in September, and we continue to hold that as an option should the exchanges not develop favorably, or they ask for unreasonable rates by the time we need to close on participation.

Comment by Don McCanne of PNHP: In this quarterly earnings conference call, Aetna's Mark Bertolini and Shawn Guertin demonstrate their executive skills in guiding this large insurance corporation in the direction of providing the greatest returns for the investors. From a corporate governance perspective, that's exactly as it should be. How well does that work from the perspective of our health care system?

Chief Financial Officer Guertin says that they will favor "margin over membership." That is, they will sacrifice the option of bringing more people under the insurance umbrella in exchange for greater profits for the Aetna investors. Is limiting access to the payer of health benefits a policy decision that we want driving our health care system?

Chairman Bertolini says that they intend to reduce the size of their already-limited provider networks by one-half to three-fourths in order to use that leverage to squeeze payment rates for their remaining providers. So they are deliberately removing choices that patients would have in selecting their health care professionals and institutions for the purpose of increasing their margins (profits). Is impairing access by restricting choice a policy decision that we want made for our health care?

Chairman Bertolini also says that they will continue to hold onto the option of pulling out of the exchanges if they do not "develop favorably" or if "they ask for unreasonable rates." Is this a policy to take care of patients, or one to take care of investors?

Imagine a public single payer program, such as an improved Medicare that covered everyone. "Margin over membership" would be unheard of. As a universal system, everyone would be included. It would be inconceivable that the stewards of the system would limit the numbers enrolled as a means of generating more favorable balance sheets.

It's the model that's wrong. We need to change it.