Aetna CEO: Obamacare Ruling May Cause Premiums to Rise

Thursday, 28 Jun 2012 05:01 PM

By Nick Tate

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Mark Bertolini, chairman and CEO of Aetna, said the Supreme Court ruling won’t have much impact on the insurance giant or other major insurers who have already committed to implementing the requirements of the Affordable Care Act.

But premiums for individual insurance policies may rise in the coming years, he said.

In an interview with CNBC, Bertolini said even though the ruling upholds the Obama care mandate that all Americans must have insurance by 2014 – in an effort to cover 30 million uninsured people – he doesn’t expect much to change for the company or the 36 million individuals that have Aetna plans.

“Our read is it's largely irrelevant to [Aetna’s] strategy as an organization,” he said. “We have to get the cost of healthcare more affordable and more simple…[but] we have been working on this strategy for two years since the bill was implemented. This stuff doesn't happen in six months.”

He said Aetna has been working to not only be compliant with the provisions of the new law, but also looking to take advantage of the opportunities it presents.
“So this decision doesn't change anything for us based on where we were going the last few years,” he said.

Bertolini acknowledged there may be new competition from government-run healthcare insurance exchanges Obamacare seeks to create.

“I think there will be, but it will require us to have a more affordable product, [and] a simpler and easier-to-understand product,” he said. “And whoever can make that happen first and best will have an advantage in the marketplace under exchanges. The exchanges will still offer our products.”

How does he expect cost-savings to be achieved under the new healthcare mandate?

“First and foremost, 80-85 percent of our costs are driven by the underlying cost of healthcare delivery. So we have to work with our providers in different relationships than we have in the past,” he said. “The age-old negotiation…will not work. So we’ve been working through an accountable-care organization model to better align our interests with those other providers and join them in being in the business of providing a more affordable higher quality product.”

Bertolini did raise the possibility, however, that premiums may rise as provisions of the new law are implemented in the coming years.

“This bill was not written well, and as a result, we have a number of things that will drive up premiums more significantly than the average cost of health care,” he said. “The minimum benefit plans that we design, 50 percent of the American public has a plan designed today that's lower than that.... So until we get other underlying costs out of the system, the effect will be higher premiums in 2014 and 2015.”

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