Aetna warned blocking of merger could affect ObamaCare work

Aetna warned last month that it would have to pull back from ObamaCare if the Department of Justice moved to block its merger with Humana, according to a letter obtained by The Huffington Post.

The revelation comes as Democrats have argued this week that Aetna’s announcement on Monday that it is dropping out of many ObamaCare markets is simply retaliation for the DOJ suing to block its merger in July. 

{mosads}Now, there is evidence that Aetna itself linked the merger with its ObamaCare participation in early July, before the DOJ announced its decision. 

However, there is an important caveat, which is that Aetna did not say in the letter that it would withdraw out of retaliation if the merger were blocked. Rather, it argued that it needed the financial benefits of a merger with Humana in order to sustain losses from ObamaCare. 

“Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses,” Aetna wrote in the letter to the DOJ on July 5. “Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.”

The reason, Aetna said is that “our ability to withstand these losses [from ObamaCare] is dependent on our achieving anticipated synergies in the Humana acquisition.”

Aetna’s public explanation on Monday for its pullback focused on the losses it has sustained on its ObamaCare business.

The Aetna letter provides new fodder for Democrats arguing that Aetna is simply playing hardball with the Obama administration and that the company’s pullback should not be used to draw broad conclusions about the sustainability of the health law as a whole. 

“The health of the American people should not be used as bargaining chips to force the government to bend to one giant company’s will,” Sen. Elizabeth Warren (D-Mass.) wrote last week about Aetna. 

Aetna is far from the only insurer suffering financial losses on the ObamaCare marketplaces, and other large insurers like United Healthcare and Humana have also announced they are pulling back from the law’s marketplaces.

Democrats have pointed to Aetna’s change of heart about the law from April as suspicious, though. That month, Aetna CEO Mark Bertolini called participation in the law a “good investment.”

Aetna spokesman TJ Crawford said in an email Wednesday that it “should not come as a surprise” that the company linked its merger with ObamaCare participation, given the financial impact of the merger being blocked. 

“A loss of deal synergies coupled with a potential break-up fee would raise further questions about sustaining a position in a business where we have yet to break even,” he said. 

Yet he also maintained that the recent financial losses on the ObamaCare marketplaces are the ultimate reason that Aetna decided to pull back.

“In the time since we submitted our written response to DOJ and provided a courtesy copy to [the Department of Health and Human Services], we gained full visibility into our second quarter individual public exchange results, which — similar to other participants on the public exchanges — showed a significant deterioration,” he said. “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.”