Judge Rules Aetna Lied About Reason for Leaving Obamacare Exchanges

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January 23, 2017 8:09 p.m.

This is a really critical story on a number of levels. The debate over Obamacare has been shaped to a great extent over the last year by Aetna’s decision to withdraw from exchanges in a number of states because, it claimed, it was losing money. But in a ruling today which blocked a proposed merger between Aetna and Humana, federal Judge John D. Bates held that Aetna’s claim was bogus. Rather than being a business decision based on the inability to make a profit in those states, Bates ruled that Aetna had withdrawn from Obamacare exchanges at least in part as a strategy to threaten its way out of the anti-trust case.

From Michael Hiltzik’s piece in the LA Times

Bates found that this rationalization was largely untrue. In fact, he noted, Aetna pulled out of some states and counties that were actually profitable to make a point in its lawsuit defense — and then misled the public about its motivations. Bates’ analysis relies in part on a “smoking gun” letter to the Justice Department in which Chief Executive Mark Bertolini explicitly ties Aetna’s participation in Obamacare to the DOJ’s actions on the merger, which we reported in August. But it goes much further.

Among the locations where Aetna withdrew were 17 counties in three states where the Department of Justice asserted that the merger would produce unlawfully low levels of competition. By pulling out, Aetna could say that it wasn’t competing in those counties anyway, rendering the government’s point moot: “The evidence provides persuasive support for the conclusion that Aetna withdrew from the on-exchange markets in the 17 complaint counties to improve its litigation position,” Bates wrote. “The Court does not credit the minimal efforts of Aetna executives to claim otherwise.”

Indeed, he wrote, Aetna’s decision to pull out of the exchange business in Florida was “so far outside of normal business practice” that it perplexed the company’s top executive in Florida, who was not in the decision loop.

The Court also found that Aetna had gone to lengths to conceal its decision-making which in themselves bordered on wrongdoing.

There’s quite a lot here – not least the adverse impact this had on Obamacare in the political realm. But it also points to much deeper issues about monopoly practices, the political impact of corporate gigantism and a company like AETNA making individual policy holders into what amounts to political and legal cannon fodder in a battle to get a merger okayed by the federal government.

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