SoylentNews is people
SoylentNews
from the dancing-elephants-are-hard-on-the-ants dept.
Submitted via IRC for crutchy with a story from Ars Technica.
Following on the heels of UnitedHealth group and Humana, insurance giant Aetna plans to "dramatically slash its participation in the public insurance marketplace" — "claims losses alone spurred decision, but there are clear links to merger."
[...] In 2017, Aetna will only offer insurance policies in 242 counties scattered across four states—that’s a nearly 70-percent decrease from its 2016 offerings in 778 counties across 15 states.
[...] In April, Mark Bertolini, the chairman and chief executive of Aetna, told investors that the insurance giant anticipated losses and could weather them, even calling participation in the marketplaces during the rocky first years “a good investment.” And in a July 5 letter (PDF) to the Department of Justice, obtained by the Huffington Post by a Freedom of Information Act request, Bertolini explicitly threatened that Aetna would back out of the marketplace if the department tried to block its planned $37 billion merger with Humana.
[Continues...]
From the July 5 letter:
[...] We have been operating on the public exchanges since the beginning of 2014 at a substantial loss. And although we have been working to improve our operations over the last 2 ½ years, we are challenged to get to break even this year and it will be some time before we recoup our investment (including a return on invested capital in the exchange business). As we add new territories, given the additional startup costs of each new territory, we will incur additional losses. Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition.
[...] We have consistently indicated to our investors that the public exchanges and the ACA small group business remain risks to our achieving our financial projections since these markets face significant hurdles as outlined above. Should the deal be blocked the challenges will be exacerbated as we are facing significant unrecoverable costs including carrying costs of the debt required to finance the deal [...] and significant unrecoverable transaction and integration costs. We currently plan to cover the above costs, as well as invest in capabilities, improve benefits, pass savings through to members and customers and expand our business using [...] synergies we expect to obtain through the transaction. If we are unable to close the transaction we will need to recover those costs plus a breakup fee and [...] litigation expenses if the DOJ sues to enjoin the transaction.
[...] We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states. In addition, we would also withdraw from at least five additional states where generating a market return would take too long for us to justify, given the costs associated with a potential break- up of the transaction. In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states. We also would not be in a position to provide assistance to failing cooperative exchanges as we did in Iowa recently.
The Ars Technica article continues:
Sixteen days after the letter was penned, the DOJ moved to block the merger. In announcing the department’s decision to file suit, Attorney General Loretta Lynch said it “would leave much of the multitrillion health insurance industry in the hands of just three mammoth companies, restricting competition in key markets.”
In interviews this week, Bertolini has brushed off the tie between marketplace participation and the merger deal, reiterating that the cuts were all based on finances. “As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Bertolini told The New York Times . He noted that the company faced “a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products.”
But Obama allies weren't buying the explanation. In a Facebook post, Senator Elizabeth Warren (D-Mass.), noted that Aetna has the right to fight the DOJ on the merger. But, she said, “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.”
[To start the discussion: What if, in those exchanges where no insurer chose to provide coverage, people would be permitted to enroll in Medicare? -Ed.]
(Score: 1, Interesting) by Anonymous Coward on Saturday August 20 2016, @08:46PM
> What if, in those exchanges where no insurer chose to provide coverage, people would be permitted to enroll in Medicare? -Ed.
Long before the current plan, I thought it made sense to slowly migrate toward single payer. Since the Medicare model is not terrible*, why not lower the eligibility age every year by a year -- first year at age 64, then age 63, etc. Or if this seemed like it would stress the system too much, lower the age by 6 months every year. Plenty of time to scale up all aspects of the program.
* Medicare is, afaik, the best (or one of the best?) we currently have at bargaining for reasonable prices from providers -- hospitals, pharma, doctors, etc. Of course Medicare is (potentially?) corrupt, so the usual house cleanings would need to be done on a regular basis.
(Score: 1, Informative) by Anonymous Coward on Saturday August 20 2016, @08:57PM
Old people are politically active, they believe they earned their Medicare, and they won't vote to share it with lazy kids who should get a job and pay for their own healthcare.
(Score: 0) by Anonymous Coward on Saturday August 20 2016, @09:07PM
> Long before the current plan, I thought it made sense to slowly migrate toward single payer. Since the Medicare model is not terrible*,
IIRC there were a bunch of republican-led states that refused to take federal money for medicare expansion because obama. But, again IIRC, the cost calculations for healthcare providers were predicated on that money effectively subsidizing many of the new people coming in via the obamacare health exchanges. Those states still got roughly the same number of people signing up for health insurance, but without as much money to support the costs.
Does anyone have a list of the states that Aetna is abandoning? I found the list of 4 states they are staying with, but I'd like to check the list of abandoned states to see how many also refused the medicare money.
(Score: 0) by Anonymous Coward on Sunday August 21 2016, @04:56PM
You do not remember correctly.
They didn't refuse because of Obama.
They refused because the terms determined that in the future, during a draw-down period, the states would have to pick up some of this expanded budget, and they objected to, among other things, the federal claim on state budgets for what is a federal project, as well as the principle that the federal government could use money to bully the states into doing the federal bidding (on which point, in front of the Supreme Court, they won).
The problem wasn't Obama. The problem was the relationship between the federal and state governments.
(Score: 1, Insightful) by Anonymous Coward on Saturday August 20 2016, @09:42PM
You better be careful what you ask for! In California if you don't qualify for healthcare insurance through "Covered Ca" (which is a fucking clusterfuck), you get dumped into Medi-Cal. Medi-Cal has a recovery clause, which means every dollar they had to pay for your medical bills comes out of your estate when you kick the bucket, leaving your heirs little to nothing. Other states may be similar. So... You pay a shitload for insurance, or you pay total costs out of your estate. No choice Obamacare, filling the fat pockets of the insurance industry.
(Score: 0) by Anonymous Coward on Sunday August 21 2016, @01:25AM
Assets? Oh that's my son's house I'm living in, and that's my daughter's car I'm driving...
If you are old (where kicking the bucket is a possibility) and have assets in your name then you are just asking for government to come around and start taxing your shit before it goes to your family.
(Score: 2, Informative) by khallow on Saturday August 20 2016, @09:48PM
(Score: 1) by Francis on Saturday August 20 2016, @11:48PM
There's nothing wrong with medicaid as long as you're in a state that's not run by the GOP. Around here medicaid is OK, it's not great, but since the Democrats were more concerned with health insurer profits that quality coverage, that's what we have.
But, it's decent enough coverage that you can probably live with it if you have it, but it's definitely not the best.
(Score: 1) by khallow on Sunday August 21 2016, @12:59AM
There's nothing wrong with medicaid as long as you're in a state that's not run by the GOP.
You whistle past the graveyard so well. I especially like how you then admit with some backhanded enthusiasm that there is something wrong with Medicaid even in your state. But then again you "probably could live with it" currently. The question is what happens in a decade or two when Medicaid has had considerable opportunity to degrade in quality and coverage?
(Score: 1) by Francis on Sunday August 21 2016, @01:57AM
I'm not really sure why I bother, you've drank more flavor-aid than the collective residents of Jonestown.
The point you're purposefully ignoring here is that medicaid covers all the things that people need, it just doesn't cover some of the niceties that the more expensive plans cover. Things like chiropractors and massage where appropriate.
I think the more relevant interpretation is that you're spouting off nonsense again and can't admit it.
(Score: 0, Flamebait) by khallow on Sunday August 21 2016, @03:44AM
The point you're purposefully ignoring here is that medicaid covers all the things that people need,
Except apparently in states that are "run by the GOP" or when "probably could live with it" is not good enough. And of course, there still is the matter of the future. Medicaid is already paying well below market rate. I don't buy that will continue without losing most physicians.
I'm not really sure why I bother, you've drank more flavor-aid than the collective residents of Jonestown.
There's that psychological projection again.
My view is that single payer could work, insurance could work. But either would require sane policies which are obviously not evident either in the US or in your writing.
(Score: 1, Insightful) by Anonymous Coward on Sunday August 21 2016, @04:53PM
Direct from a doctor friend of mine (in fact, he's in practice as well as a professor of medicine):
The prices for time provided by Medicare and Medicaid are such that doctors are actually leaving the profession, especially in specialties more affected by them (such as Internal Medicine), to the point that the AMA's restrictions on numbers of medical graduates is leaving this country with reductions in availability of doctors. It's not uniform, it's not massive, but the bleeding has begun.
This is why there are constantly exceptions being written into the statutes around medical billing - precisely to give those doctors a break. Especially the ones who have massive study debt. (There have also been a few articles in the Economist on this topic.)
Another problem is where pharmaceutical companies simply stop making drugs. They have the production lines, the employees, the process, the labels, the everything already sorted out - all they have to do is make, sell, and collect money. But they can't do it at a profit any more, so they don't. The FDA gets huffy and demands prior notice and phase-out periods so that they can try to get someone else to make the stuff - but they can't, the phase-out period passes and the stuff just doesn't get made. Oh well.
So, yeah. Please revisit that bit about negotiating (as opposed to dictating) terms of payment?