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The Business of Healthcare With Habanero: Those Dirty Rats at Aetna

By Habanero

So many people like to talk about what a disaster the ACA (aka ObamaCare) was, however, it seems that people forget a few key points.  First, it wasn’t implemented as designed.  There were many detrimental compromises included and many partisan roadblocks thrown up. 

And it seems that many people have also forgotten that the insurance companies are for-profit entities, responsible not to the ACA, not to their providers, not to patients.  They are beholden to their shareholders.  All the other stuff – laws to follow, people to satisfy, all come as side dishes to the primary objective – profit. 

Aetna recently made a controversial decision that put profit before patient care, though few were able to hear about it in a news media so enthralled with the new president.  These stories show just how important profit is to the insurance industry. 

The stories:

“How Aetna frittered away $1.8 billion on a merger destined to fail”.  http://www.latimes.com/business/hiltzik/la-fi-hiltzik-aetna-merger-20170214-story.html

“U.S. judge finds that Aetna deceived the public about its reasons for quitting Obamacare” http://www.latimes.com/business/hiltzik/la-fi-hiltzik-aetna-merger-20170214-story.html

You can read them yourself, but the Cliff Notes version is this:

Aetna is a powerful force in the health insurance market and has been for decades.  Many people on the east coast are likely familiar with the name.  Humana is another giant, with more of a southern and western presence.  In the modern spirit of “bigger is better,” these two behemoths had been working on a merger.  Of course, they touted this as a benefit to consumers, although you know they wouldn’t be doing it if it wasn’t truly a benefit to themselves.

But the Justice Department was concerned about this merger and the impact it would have on costs and competition.

Aetna pulled a super sneaky stunt and got caught. 

It turns out Aetna had threatened the Justice Department that if the merger wasn’t approved, the company would pull out of the Affordable Care Act (ACA).  This is a big deal because Aetna is such a big player, and the ACA was still in the fragile early years of a new program. 

Well, the Justice Department was not going to be bullied.  They opposed the merger.

After Aetna had pulled out of the ACA, Justice did some investigation of their own and learned that there were so many deceitful actions by Aetna that the presiding judge cited malfeasance. 

This was an expensive strong arm tactic that backfired on the insurer.  I would expect the shareholders to be pretty unhappy about the whole incident.

The Business of Healthcare With Habanero airs alternating Fridays at 1:30 pm