Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Senate Democrats Accuse Aetna of Retaliating with Exchange Exits

By Jad Chamseddine, CQ Roll Call

September 9, 2016 -- Sen. Elizabeth Warren of Massachusetts and other Democrats, in a letter to Aetna Inc. CEO Mark Bertolini, accuse the health insurer of deciding to pull out of 11 health care exchanges in retaliation for a Justice Department (DOJ) lawsuit to block Aetna's acquisition of Humana Inc.

Warren was joined by fellow Senate Democrats Edward J. Markey of Massachusetts, Sherrod Brown of Ohio and Bill Nelson of Florida, as well as independent Sen. Bernie Sanders of Vermont in her letter to Bertolini. Warren said Aetna's departure from the health law's exchanges appears "to have been motivated" by the government's lawsuit against the proposed $37 billion merger.

The letter writers back the Justice Department in its suit to block the health care insurance merger, arguing many experts predict the transaction would "harm competition in the health insurance market and negatively impact the cost and quality of health care."

Aetna announced last month it was withdrawing from 11 state-based exchanges citing financial losses. The company at the time said it had lost about $430 million since 2014.

Aetna's announcement came about a month after the Justice Department said it was filing suit in federal court to prevent Aetna and Humana from combining their companies. The decision to enjoin the companies from merging their assets was part of a larger plan to keep the health care insurance market competitive as the Justice Department announced it was also blocking Anthem Inc. from buying Cigna Corp. on the same day.

Warren was one of the first lawmakers to publicly air her anger at Aetna for leaving the exchanges. She made the comments in a Facebook post on Aug. 11, accusing the insurer of retaliating against the government's suit. Now in the letter, she expounds on that theory and said antitrust concerns raised by the merger between Aetna and Humana were "widely anticipated" and should not have come as a surprise to Aetna.

"Despite the risk that the merger would not be approved, Aetna agreed to pay Humana a break-up fee of $1 billion in the event that the acquisition was not completed" by Dec. 31, Warren and the other senators said in the letter. They argue it proves Aetna's lawyers knew the deal would raise issues with regulators and on Capitol Hill.

But, the senators continue, paying $1 billion to Humana, in addition to the merger-related expenses, could become a significant burden on Aetna, which until the spring of 2016 remained committed to its presence in all 15 exchanges.

It was not until meetings with the Justice Department in April and May led Aetna to believe the government would probably block the transaction. The letter cites different instances in which Aetna told investors during earnings calls in 2015 and early 2016 its role in the exchanges was a "good investment" and that it was looking to expand to other states while also working with the Obama administration and lawmakers to keep the program functioning properly.

This all changed, the letter says, when the Justice Department "began to raise questions about the merger," leading Aetna to "change its tune."

The health insurer told the Justice Department in a letter in early July it "expressly conditions its continued participation in the public exchanges" on the DOJ's approval of the deal with Humana, arguing that without adding Humana's assets it would hurt Aetna's financials and it would be forced to "immediately take action to reduce" its footprint.

"Aetna's decision regarding its participation in the ACA exchanges appears to be an effort to pressure the Justice Department into approving a merger that the Department alleged violates antitrust law and has the potential to significantly harm consumers all across the country," the letter says.

The letter from Bertolini explaining the insurer would have to leave the exchanges if the transaction is blocked was compelled from the company during a civil investigative demand for documents and information by the Justice Department asking Aetna to explain the consequences if the deal is blocked.

But this narrative was immediately rejected by Aetna. In a statement to CQ Roll Call, T.J. Crawford, an Aetna spokesman, points to the fact many insurers, "large and small," were forced to reduce their public exchange participation, with more than 40 companies leaving certain geographic areas.

"Singling Aetna out may be politically convenient during election season, but this letter ignores realities and takes the focus away from needed reforms," Crawford said. "The ACA is not sustainable without bipartisan action that improves access, affordability and quality of care for consumers."

Aetna has offered to settle with the government out of court by agreeing to sell $117 million worth of Medicare Advantage assets to Molina Healthcare Inc. in early August. But the Justice Department had already rejected similar proposals by the health care insurer, saying in its complaint with the district court that "divesting bits and pieces to smaller insurers" wouldn't be enough to maintain competitive vigor in the health insurance industry.

The case is set to go to trial in the U.S. District Court for the District of Columbia on Dec. 5 with District Court Judge John Bates presiding over the case. Aetna asked the court in late July to hear the case sometime in the fall, but did not specify a date. Aetna was pushing for an aggressive pretrial schedule because Humana can walk away from the transaction by the end of December, a possibility Humana executives have alluded to.

Publication Details