Aetna dealt a blow to the Affordable Care Act this week when the insurance giant announced that it was drastically reducing its participation in the law’s health-care marketplaces. The company had been providing coverage in 15 states but will now serve only 4.
In many places, the move will reduce insurer competition, likely allowing other providers to jack up their rates; in one county, it could mean that there won’t be any insurers slated to offer coverage via Obamacare in 2017.
Officially, Aetna’s decision was motivated by the fact that participating in the state exchanges was losing the insurer money. Which is a highly plausible reason why a for-profit entity might pull out of a marketplace. Aetna is far from the only insurer who has discovered one of Obamacare’s central flaws: People willing to go through the hassle of signing up for health insurance through the program are sicker than the general population. This problem was supposed to be mitigated by the individual mandate, which levels a punitive tax on young, healthy people who chose to forgo coverage. Unfortunately, that tax has proven too small to get unemployed millennials to stop playing Pokémon Go long enough to buy health insurance.
But the Huffington Post reports that there may have been a second motivation for Aetna’s move: revenge.
Aetna is currently pursuing a merger with fellow insurance titan Humana. Last month, the Justice Department announced that it plans to prevent them from doing that.
“For most Americans, health insurance is not luxury but a necessity,” Attorney General Loretta Lynch told reporters. “Health insurance can mean the difference between life and death. If the big five were to become the big three, not only would the bank accounts of American people suffer, but the American people themselves.”
Weeks earlier, Aetna CEO Mark Bertolini essentially told the Obama administration, “Nice insurance exchanges you got here. Would be a shame if something made them less competitive.” In a letter to the DOJ, obtained by the Huffington Post, Bertolini wrote of his company’s planned merger:
[I]f the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.
On the one hand, this doesn’t necessarily undermine Aetna’s official story: Merging with Humana would have made it easier for the company to continue sustaining ACA losses. Thus, by telling the DOJ what the likely result of a failed merger would be, Aetna was merely being transparent.
From another angle, however, the letter appears to show a corporation threatening to use its massive market share to undermine public policy — unless the government agrees to let it drastically expand that market share.
Regardless, it appears that relying on for-profit enterprises to provide affordable insurance over subsidized marketplaces might not be the best way for a government to guarantee universal health care.