Seek­ing sales and scale from sell­ing to se­niors

Modern Healthcare - - POLITICS - —Bob Her­man

Aetna CEO Mark Bertolini rang in the new year by pulling the com­pany out of Amer­ica’s Health In­sur­ance Plans, the in­dus­try’s largest trade group. He chose to go it alone at a piv­otal time. The in­surer’s tra­di­tional busi­ness is based on sell­ing plans to em­ploy­ers. But last year Aetna set its sights on be­com­ing a Medi­care Ad­van­tage be­he­moth. This year will de­ter­mine if Bertolini can pull it off.

Aetna won the bid­ding war last July to ac­quire Louisville, Ky.-based Hu­mana in a $37 bil­lion deal. Bertolini, who beat out Cigna Corp. CEO David Cor­dani, has been straight­for­ward in his rea­son­ing. Hu­mana is one of the largest Medi­care Ad­van­tage in­sur­ers in the coun­try, and Aetna wants to be­come the premier name for se­niors who want pri­vate Medi­care cov­er­age, an in­creas­ingly lu­cra­tive busi­ness for in­sur­ers.

Bertolini in­di­rectly sig­naled it wouldn’t take much for merger ma­nia to hit the in­sur­ance sec­tor when he told the J.P. Mor­gan Health­care Con­fer­ence in San Fran­cisco last Jan­uary that “it’ll take one trans­ac­tion to tip the whole thing off.” The sub­se­quent wheel­ing and deal­ing con­sumed the big five in­sur­ers dur­ing the first half of 2015.

If reg­u­la­tors ap­prove the deal, the Hu­mana trans­ac­tion will open the door for Bertolini to con­vert Aetna into a “health­care ser­vices” com­pany by build­ing up its phar­macy and data-an­a­lyt­ics busi­nesses.

Bertolini made a ma­jor state­ment last year when he raised the min­i­mum wage of Aetna em­ploy­ees to $16 an hour. He is con­fi­dent that the U.S. Jus­tice Depart­ment and state in­sur­ance reg­u­la­tors will back the Hu­mana deal this sum­mer.

Yet mem­bers of Congress have been leery about the ef­fects of in­dus­try con­sol­i­da­tion. And while an­titrust ex­perts are di­vided on its eco­nomic im­pact, reg­u­la­tors ap­pointed by the lame-duck Obama ad­min­is­tra­tion may side with con­sumer groups who op­pose the deal.

Be­yond Medi­care, Aetna also will grow its in­di­vid­ual ex­change pres­ence to more than 1.4 mil­lion peo­ple by com­plet­ing the Hu­mana ac­qui­si­tion. Bertolini has pres­sured the Obama ad­min­is­tra­tion to drop sev­eral in­sur­ance pro­pos­als for 2017, in­clud­ing one that would stan­dard­ize ex­change plans. He con­tin­ues to ex­press faith in the new mar­ket­places de­spite the in­dus­try’s broader angst. “We think it’s way too early to call it quits,” he said last year.

“Our sav­ings will be passed along in the price of our prod­uct.”

—Bertolini’s con­gres­sional tes­ti­mony on the pro­posed Hu­mana merger, Septem­ber 2015

Mark Bertolini Po­si­tion

Chair­man and CEO



Ten­ure Five years as CEO, 12-plus years at Aetna

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