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Did Aetna Need Merger to Stay in Health Insurance Exchanges?

Health Payer Intelligence

More and more payers are slowly dropping out of the Affordable Care Act’s health insurance exchanges. Earlier this year, UnitedHealth formally announced the decision to discontinue selling plans on the health insurance exchanges. More recently, one of the country’s largest payers - Aetna - also declared that, next year, it will be pulling out of most of the exchanges it has been participating in.


Another major story revolving around Aetna has been the Department of Justice’s decision to pursue a lawsuit against the Aetna-Humana health insurance merger due to anticompetitive factors and potential harm to consumer interests. According to a letter Aetna CEO Mark Bertolini sent to the Department of Justice, the health payer had warned the agency that if alawsuit was filed against this merger, financial restrictions would lead Aetna to leave huge sects of the health insurance exchanges.

It is important to mention that Aetna has been operating at a loss within the health insurance exchanges since 2014 but the company may be able to break even this year. While the letter from Bertolini does suggest that the payer would be unable to operate within the health insurance exchanges without its merger with Humana, one legal expert thinks otherwise - especially due to the sheer size of Aetna.

In an interview with, David Balto, counsel for the Coalition to Protect Patient Choice, disagreed with the idea that the Department of Justice’s decision to block Aetna’s merger affected its ability to participate in the ACA health insurance exchanges. Balto went on to claim that Aetna essentially pressured the agency to keep from filing a lawsuit against its merger in order to ensure the payer continues operating on the exchanges.

“Aetna is a very large health insurer with substantial resources that it can draw on. It doesn’t need Humana to compete in insurance markets, and DOJ's decision to block the merger likely doesn't impact its ability to participate in the health care exchanges,” Balto said.

As others have reported, this claim was likely an attempt by Aetna to establish a quid pro quo with DOJ; let the merger with Humana proceed, and we will maintain and expand our presence on the exchanges,” Balto continued. “DOJ rightly rejected this underhanded attempt to make a deal. The court will do the same. The courts have always held that an anticompetitive merger cannot be justified if there is some other goal that could be met.”

Now that a court case is in the works regarding the health insurance merger between Aetna and Humana, it is important to consider whether the Department of Justice will be successful in blocking the acquisition altogether. Balto alleges that the evidence leans toward the merger being stopped.

“DOJ [Department of Justice] has a very powerful case, and Aetna's main arguments are weak and fall flat,” Balto claimed. “Every economic study has demonstrated that mergers raise premiums.  That history will be dispositive to the court. They claim the merger with Humana will benefit consumers, but they have provided no evidence of this. DOJ said they have seen no evidence that the merger will benefit ordinary Americans; we haven't either. When asked for hard facts on these supposed benefits, the companies have responded with evasions and vague platitudes. The judge is unlikely to find that convincing.”

Another vital point that Balto brings up is the fact that Aetna leaving the exchanges will have some impact on consumers who are left scrambling to find new health plans.

When asked about the significance of Aetna withdrawing from the exchanges, Balto said, “Aetna's withdrawal won't harm all participants in those exchanges. but it will harm a significant minority of consumers. They will have to sign up for other plans or purchase individual insurance outside of the exchanges, and they will have significantly fewer choices.”

“Participants may also have to sign up for plans that don’t include their preferred providers in their network coverage. Rural counties will also be disproportionately affected,” he concluded. “Additionally, consumers will have fewer choices.”

However, National Public Radio reports that consumers may not be as harmed as presumed by national payers’ decision to pull out of the health insurance exchanges. While some consumers may be impacted by these actions, the majority will still have sufficient coverage options.

“The effect on consumers is going to be mixed around the country,” Katherine Hempstead, a Senior Adviser at the Robert Wood Johnson Foundation, told NPR. “Most of these marketplaces are not dependent on [national payers].”

Merrill Matthews, Resident Scholar at the Institute for Policy Innovation, wrote in a Forbes contribution how operating on the health insurance exchanges may actually lead to financial losses for private, commercial payers including a drop in their stock numbers.

Initially, stock prices rose significantly when the Affordable Care Act looked promising but since payers began experiencing financial losses, stock prices began slowly declining, explained Matthews. He went on to mention that ever since UnitedHealth had decided to drop out of the exchanges, its stock prices began climbing again.

“Now, the other major insurers are looking for the exit door, and rightfully so,” wrote Matthews. “But the companies have to be careful because they may want to continue in other profitable lines of business, such as the group market or Medicare—which are regulated by Obama bureaucrats. And the companies know just how vindictive Obama administration bureaucrats can be when Obamacare’s deceptions and false promises are exposed.”

While the Affordable Care Act has had a variety of impacts on the health insurance market with some of it negative, stating that the ACA’s mission had anything to do with improving the profitability of healthcare payers is essentially false. This landmark healthcare legislation was meant to expand healthcare coverage across the country and, due to Medicaid expansion and the exchanges, an additional 20 million Americans now have healthcare access and coverage.

Healthcare payers will need to learn how to manage revenue and premium prices more effectively when operating through the ACA’s health insurance exchanges in the coming years. Despite some struggles that payers have faced, the Affordable Care Act has clearly benefited consumers by bringing more coverage options than in prior decades.