Aetna CEO Warned of Obamacare Pullout Over Merger Challenge
Aetna Inc's CEO said in a letter to the U.S. Department of Justice during the review of its deal to buy rival Humana Inc that the insurer would exit much of the individual Obamacare insurance market if the agency challenged the merger. In the July 5 letter, Chief Executive Officer Mark Bertolini said it would be some time before the company recouped the investment it had made over the past 2 1/2 years in the government-subsidized insurance plans created under President Barack Obama's national healthcare reform law. "Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition," Bertolini wrote, according to a copy of the letter posted on the Huffington Post website, which obtained the document though the Freedom of Information Act. "Unfortunately, a challenge by the DOJ to that acquisition and/or the DOJ successfully blocking the transaction would have a negative financial impact on Aetna and would impair Aetna's ability to continue its support," he wrote. UnitedHealth Group Inc and Humana Inc have cited similar concerns about financial losses on the Obamacare exchanges and have also cut back most of their plans for 2017. The Justice Department moved on July 21 to block Aetna's acquisition of Humana and Anthem Inc's purchase of Cigna Corp, saying the two deals would lead to higher prices. Aetna on Monday announced it would pull out of selling individual insurance on the government-run websites in 11 states, saying its losses on the business were too high. Aetna spokesman TJ Crawford said in an e-mailed statement that since the company submitted the letter to the Justice Department, it had a better view of the business line's second-quarter performance. "That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year," Crawford said. Aetna shares were unchanged in premarket trading.