Why Aetna Is Not a Villiain

Story Stream
recent articles

Aetna, the giant insurance company, is finding out what happens when you're a company that doesn't fall in line with the government's agenda. As the Huffington Post's Jonathan Cohn and Jeff Young recently reported, Aetna CEO Mark Betolini notified the Department of Justice (DOJ) last month that should the agency challenge or block their pending merger with rival insurer Humana, Aetna would reduce its participation in the Affordable Care Act's (ACA) exchanges.

In late July, Attorney General Loretta Lynch filed suit to block the proposed Aetna-Humana and Anthem-Cigna mergers. Last week, keeping its promise, Aetna announced its significantly rolling back its participation in the ACA.

Oddly enough, the government seems to be scratching its head as to how that happened, and defaulting to its tried and true strategy of portraying insurers, particularly Betolini, as villains.

The Huffington Post story raises an important issue, but not the one you think. The issue is: Is it the job of the federal government to villainize a company that didn't break the law, but merely made a strategic business decision and pulled out of a government program? Aetna is a public company with almost 50,000 employees and shareholders to answer to. Its obligation is to these groups and to its customers. If Aetna behaves ethically, complies with laws and pays its taxes, must it also be on board with a government agenda or face leaks to the media to make the company look bad? This "Aetna (and other insurers) is a villain" narrative being pushed in the media is nonsense and is designed to deflect attention from the government's own failures in designing and implementing the ACA.

While the ACA has brought insurance to those that previously didn't have coverage, Democratic lawmakers failed to consider that one of their primary target demographics for coverage is not interested. Government mandates are in direct conflict with millennials' values-and they're not signing up at the rate initially expected. For insurers that's a huge issue and it equates to dollars and cents. Millennials are the healthy population needed to enroll and balance the scales for those in the exchanges that heavily draw on their coverage, like the sick or elderly. As it stands the numbers simply don't add up and insurers are losing hundreds of millions on their ACA health plans.

Aetna is not alone in being targeted because it made a business decision or has practices that don't please the government. Under the auspices of protecting consumers or the environment, government agencies-DOJ, EPA, FDA, FTC, USDA-pressure companies through subpoenas, document production demands, and threats of onerous regulations and mandates all the time. Usually, these companies don't have any leverage over the feds or state governments and just have to take it-or they hire attorneys and consultants like us to fight back. There is a constant operational calculation for the companies as to whether they should spend the money or just give in.

This merger adverse administration is forcing these companies to throw good money after bad. As of May, the Obama DOJ and the FTC have killed mergers valued at more than $400 billion. Meanwhile, a barrage of new and changing government regulations, or uncompetitive policies are increasing the cost of doing business for many of the companies that sought to merge. Ironic because these mergers are frequently intended to achieve economies of scale in complying with government regulations. Denying these mergers while continually burdening the nation's primary tax-base, doesn't win any favors.

How this particular chapter for Aetna concludes remains to be seen, but if insurers (or any industry for that matter) aren't able to turn profits, and aren't able to reduce those losses through mergers and acquisitions, and are being hit with an unpredictable regulatory landscape-there is little hope for significant economic growth. And while media are dubbing Bertolini's letter as a "smoking gun;" we'd call it a sound, strategic and completely legal business decision, rooted in keeping his company profitable so they can create jobs, contribute to the economy and provide quality insurance coverage at a reasonable cost.

We don't begrudge the government, state or federal, doing its job. Debating the merits of proposed mergers is beyond our expertise. But the fact remains that companies have a right to make business decisions without retribution from the government.


Anne Marie Malecha is Senior Vice President and Steven Schlein is Executive Vice President of Dezenhall Resources Ltd., a public affairs and crisis management firm in Washington, D.C. that specializes in counseling businesses through regulatory and marketplace challenges.  

Show commentsHide Comments

Related Articles