- REUTERS/Joshua Roberts
US senators have some questions for health insurance giant Aetna.
Elizabeth Warren (D-Massachusetts), Bernie Sanders (I-Vermont), and three other Democratic senators sent a letter on Thursday to Aetna CEO Mark Bertolini questioning the motivations of the company in its decision to ditch 70% of its Affordable Care Act – better known as Obamacare – business.
Aetna said in August it was leaving the ACA exchanges in 70% of the counties in which it offers insurance because of losses sustained through the ACA business.
The day after the announcement, however, a letter from Bertolini to the Department of Justice revealed the firm believed that if a proposed merger with rival Humana were blocked it would have to pull out of the exchanges.
In the letter, which was in response to a direct request from the department to outline the impact of the merger on Aetna’s ACA business, Bertolini said that if the merger did not go through, it would pull back immediately from its ACA business. He also stated that if it did go through, the company would expand its ACA coverage.
The Justice Department sued in late July to stop the merger with Humana. In its quarterly earnings report, a week after the department’s announcement, Aetna expressed concern over the future of its ACA business because of a $200 million loss in the second quarter.
In their letter, the senators noted that there was reason for the company to be wary of a possible Justice Department lawsuit and that the $1 billion merger break-up fee was a “expensive and risky bet on a highly uncertain outcome.” By attaching a break-up fee of that size to the deal, the senators argue, Aetna was attempting to force the department’s hand into approving the merger.
“Aetna’s letter describes a dangerous and irresponsible bet that the Justice Department would not block the deal because Aetna has structured the deal in a way that would cause significant damage to itself and, by extension, to the public exchanges, if it was blocked,” the letter said.
“Because the risks of the merger were obvious from the beginning, these actions are both inexplicable and irresponsible.”
Bertolini noted in his July letter to the Justice Department that if the deal were to fall through, the firm would need to “recover those costs plus a … break-up fee” and litigation expenses.
Aetna has since said the losses, not the lawsuit against the merger, were the primary reason for the Obamacare pullback, but that the lawsuit did play a factor.
The senators also pointed to a number of statements from Bertolini and Aetna in support of the sustainability and long-term commitment of Aetna to the ACA exchanges, saying the company was supportive of the exchanges from a business perspective up until the merger was scuttled.
In a statement to Business Insider, Aetna spokesperson TJ Crawford said the company is not the only one rolling back coverage from the exchanges, and that the letter is unfairly singling out Aetna:
“We are one of many insurers, large and small, that has been forced to reduce its public exchange participation due to an increasingly unstable marketplace. This isn’t a recent development, as more than 40 companies exited certain geographies for the 2016 plan year.
“Singling Aetna out may be politically convenient during election season, but this letter ignores realities and takes the focus away from needed reforms. The ACA is not sustainable without bipartisan action that improves access, affordability and quality of care for consumers.”
In addition to Warren and Sanders, Sens. Sherrod Brown of Ohio, Edward Markey of Massachusetts, and Bill Nelson of Florida signed the letter.