Aetna Gun Control Donation Epitomizes Crony Capitalism

Just when conservatives couldn’t find enough reasons to oppose an Obamacare “stability” package — or the law itself — the health insurance industry generated another. Aetna’s CEO Mark Bertolini announced Tuesday the company would donate $200,000 to support the March for Our Lives gun control rally scheduled for later this month.

Which raises an obvious question: If a company like Aetna can afford to make a six-figure contribution to a liberal gun control effort, why exactly did health insurers spend some of Tuesday asking for taxpayers to provide a multi-billion dollar “stability” package for the Exchanges?

And when it comes to taxpayer largesse, Aetna has already received plenty. According to page 56 of its most recent quarterly financial filing, last year Aetna’s revenue from government business outstripped its private-sector commercial enterprises: Even as private sector revenues dropped the past two years, government business rose by over $4.5 billion, due at least in part to the additional revenues generated by Obamacare’s Medicaid expansion.

As with other health insurers, Aetna has rapidly become an extension of the state itself — a regulated utility that focuses largely on extracting more business from government. Rather than focusing on new innovations and selling product to the private sector, it instead hires more lobbyists to seek rents (e.g., a “stability” package) from government. And in exchange for such governmental payments, it promotes liberal causes that will win the company plaudits from the statists who regulate it.

Other health insurance organizations have taken much the same tack. Several years ago, the House Ways and Means Committee exposed how AARP received numerous exemptions for its lucrative Medigap plans in Obamacare. Not coincidentally, the organization had previously used its “Divided We Fail” campaign to funnel money to such liberal organizations as the NAACP, the Human Rights Campaign, the Congressional Black Caucus Foundation, and the National Council of La Raza.

(Yes, I recognize that, technically speaking, AARP is not a health insurer. Whereas health insurers might have to place money at risk, AARP faces no such barrier, and can instead reap pure profit by licensing its name and brand.)

On Twitter Thursday evening, I asked Aetna CEO Mark Bertolini if he considers abortion a public health issue — the company’s stated reason for contributing to the March for Our Lives. If Aetna purportedly cares so much about gun violence, it should similarly care about violence against the unborn. But I won’t hold my breath waiting for Aetna to contribute to the March for Life, or any other pro-life cause.

Mind you, a private company can make contributions to whichever organizations it likes or does not like. Unfortunately, however, Aetna and many other insurers aren’t acting like private companies. In constantly begging for taxpayer dollars, they’re acting like wards of the state.

That dynamic provides conservatives with the perfect reason to oppose an Obamacare “stability” package — and support the law’s full repeal. Weaning health insurers off the gusher of taxpayer dollars Obamacare created would represent a move away from the current statist status quo. And who knows? It might — just might — get some health care companies to look beyond government as the solution to all their problems.

This post was originally published at The Federalist.

How HHS’ Proposed Rule Would (Slightly) Improve Obamacare

This morning, the Department of Health and Human Services (HHS) released a rule proposing several changes to Obamacare insurance offerings. The regulations are intended to help stabilize insurance markets and hopefully pave the way for a repeal and transition away from Obamacare.

Worth noting before discussing its specifics: The rule provides a period of notice-and-comment (albeit a shortened one) for individuals who wish to weigh in on its proposals. This decision to elicit feedback compares favorably to the Obama administration, which rushed out its 2018 Notice of Benefit and Payment Parameters without prior public comment during the “lame duck” post-election period. Because the Obama administration wanted that regulation to take effect before January 20—so President Trump could not withdraw the regulation upon taking office—HHS declined to allow the public an opportunity to weigh in before the rules went into effect.

  • A shortening of next year’s open enrollment period from three months to six weeks—a solution included in my report on ways the new administration can mitigate the effects of Obamacare. In theory, the rule could (and perhaps should) have proposed an even shorter open enrollment window, to prevent individuals from signing up after they develop health conditions.
  • A requirement for pre-enrollment verification of all special enrollment periods for people signing up on the federal exchange, healthcare.gov—again outlined in my report, and again to cut down on reports that individuals are signing up for coverage outside the annual open enrollment period, incurring costly expenses, then dropping coverage.
  • Permitting insurers to require individuals who have unpaid premium bills to pay their debts before enrolling in coverage—an attempt to stop the gaming of Obamacare’s 90-day “grace period” provision, which a sizable proportion of enrollees have used to avoid paying their premiums for up to three months.
  • Increasing the permitted range of actuarial value variation—also outlined in my report—to give insurers greater flexibility.
  • Additional flexibility on network adequacy requirements, both devolving enforcement to states and allowing insurers greater flexibility in those requirements. Some might find this change ironic—critics of Obamacare have complained about narrow physician networks, and this change will allow insurers to narrow them even further. Yet the problem with Obamacare and physician access is that insurers have been forced to narrow networks. The law’s new benefit mandates have made increasing deductibles, or cutting provider reimbursements, the only two realistic ways of controlling costs. Unless and until those statutory benefit requirements are repealed, those incentives will remain.

One key question is whether these changes by themselves will be enough to stabilize markets, and keep carriers offering coverage in 2018. Given that Aetna CEO Mark Bertolini this morning called Obamacare in a “death spiral,” and Humana announced yesterday it will exit all exchanges next year, that effect is not certain.

As my report last month outlined, the new administration can go further with regulatory relief for carriers, from further narrowing open enrollment, to reducing exchange user fees charged to insurers (and ultimately enrollees), to providing flexibility on medical loss ratio and essential benefits requirements, to withdrawing mandates to provide contraception coverage. All these changes would further improve the environment for insurers, and could induce more to remain in exchanges for 2018.

However, as my post this morning noted, the ultimate action lies with Congress. The Trump administration, and HHS under new Secretary Tom Price, have started to lay a foundation providing relief from Obamacare. Now it’s time for the legislature to take action, and deliver on their promise to the American people to repeal Obamacare.

This post was originally published at The Federalist.

Aetna’s New Obamacare Strategy: Bailouts or Bust

Tuesday’s announcement by health insurer Aetna that it had halted plans to expand its offerings on Obamacare exchanges and may instead reduce or eliminate its participation entirely, caused a shockwave among health-policy experts. The insurer that heretofore had acted as one of Obamacare’s biggest cheerleaders has now admitted that the law will not work without a massive new infusion of taxpayer cash.

In an interview with Bloomberg, Aetna’s CEO, Mark Bertolini, explained the company’s major concern with Obamacare implementation:

Bertolini said big changes are needed to make the exchanges viable. Risk adjustment, a mechanism that transfers funds from insurers with healthier clients to those with sick ones, “doesn’t work,” he said. Rather than transferring money among insurers, the law should be changed to subsidize insurers with government funds, Bertolini said.

“It needs to be a non-zero sum pool in order to fix it,” Bertolini said. Right now, insurers “that are less worse off pay for those that are worse worse off.” 

A brief explanation: Obamacare’s risk adjustment is designed to even out differences in health status among enrollees. Put simply, plans with healthier-than-average patients subsidize plans with sicker-than-average patients. But the statute stipulates that the risk-adjustment payments should be based on “average actuarial risk” in each state marketplace — by definition, plans will transfer funds among themselves, but the payments will net out to zero.

Risk adjustment, a permanent feature of Obamacare, should not be confused with the law’s temporary-risk-corridor program, scheduled to end in December. Whereas risk corridor subsidizes loss-making plans, risk adjustment subsidizes sicker patients. And while plans can lose money for reasons unrelated to patient care — excessive overhead or bad investments, for instance — insurers incurring perpetual losses on patient care have little chance of ever breaking even.

That’s the situation Aetna says it finds itself in now. In calling for the government to subsidize risk adjustment, Bertolini believes that for the foreseeable future insurers will continue to face a risk pool sicker than in the average employer plan. In other words, the exchanges won’t work as currently constituted, because healthy people are staying away from Obamacare plans in droves. Aetna’s proposed “solution,” as expected, is for the taxpayer to pick up the tab.

It’s not that insurers haven’t received enough in bailout funds already. As I have noted in prior work, insurance companies stand to receive over $170 billion in bailout funds over the coming decade. For instance, the Obama administration has flouted the plain text of the law to prioritize payments to insurers over repayments to the United States Treasury. But still insurance companies want more.

Some viewed Aetna’s threat to vacate the exchanges as an implicit threat resulting from the Justice Department’s challenging its planned merger with Humana. But the reality is far worse: Aetna was conditioning its participation not on its merger’s being approved but on receiving more bailout funds from Washington.

Like a patient in intensive care, the Left wants to administer billions of dollars to insurers as a form of fiscal morphine, hoping upon hope that the cash infusions can tide them over until the exchanges reach a condition approaching health. Just last month, the liberal Commonwealth Fund proposed extending Obamacare’s reinsurance program, scheduled to end this December, “until the reformed market has matured.” But as Bertolini admitted in his interview, the exchanges do not work, and will not work — meaning Commonwealth’s suggestion would create yet another perpetual-bailout machine.

Only markets, and not more taxpayer money, will turn this ailing patient around. Congress should act to end the morphine drip and stop the bailouts once and for all. At that point, policymakers of both parties should come together to outline the prescription for freedom they would put in its place.

This post was originally published at National Review.