LA Times

U.S. judge finds that Aetna deceived the public about its reasons for quitting Obamacare

Michael Hiltzik, Contact Reporter   May 12, 2017

Aetna claimed this summer that it was pulling out of all but four of the 15 states where it was providing Obamacare individual insurance because of a business decision — it was simply losing too much money on the Obamacare exchanges.

Now a federal judge has ruled that that was a rank falsehood. In fact, says Judge John D. Bates, Aetna made its decision at least partially in response to a federal antitrust lawsuit blocking its proposed $34-billion merger with Humana. Aetna threatened federal officials with the pullout before the lawsuit was filed, and followed through on its threat once it was filed. Bates made the observations in the course of a ruling he issued on Monday blocking the merger.

Aetna executives had moved heaven and earth to conceal their decision-making process from the court, in part by discussing the matter on the phone rather than in emails, and by shielding what did get put in writing with the cloak of attorney-client privilege, a practice Bates found came close to “malfeasance.”

Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger. — U.S. District Judge John D. Bates

The judge’s conclusions about Aetna’s real reasons for pulling out of Obamacare — as opposed to the rationalization the company made in public — are crucial for the debate over the fate of the Affordable Care Act. That’s because the company’s withdrawal has been exploited by Republicans to justify repealing the act. Just last week, House Speaker Paul Ryan (R-Wis.) cited Aetna’s action on the “Charlie Rose” show, saying that it proved how shaky the exchanges were.

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 on the individual exchanges. By pulling out, Aetna could say that it wasn’t competing in those counties’ exchanges 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.

“I just can’t make sense out of the Florida decision],” the executive, Christopher Ciano, wrote to Jonathan Mayhew, the head of Aetna’s national exchange business. “Based on the latest run rate data . . . we are making money from the on-exchange business. Was Florida’s performance ever debated?” Mayhew told him to discuss the matter by phone, not email, “to avoid leaving a paper trail,” Bates found. As it happens, Bates found reason to believe that Aetna soon will be selling exchange plans in Florida again.

As for Aetna’s claimed rationale for withdrawing from all but four states, Bates accepted that the company could credibly call it a “business decision,” since the overall exchange business was losing money; he just didn’t buy that that was its sole reason. He observed that the failings in the marketplace existed before Aetna decided to withdraw, but that as late as July 19, the company was still planning to expand its footprint to as many as 20 states. In April, top executives had told investors that Aetna had a “solid cost structure” in Florida and Georgia, two states it dropped.

While the Department of Justice was conducting its investigation of the merger plans but before the DOJ lawsuit was filed, “Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger,” Bates observed. During a May 11 deposition of Bertolini, an Aetna lawyer said that if the company “was not ‘happy’ with the results of an upcoming meeting regarding the merger, ‘we’re just going to pull out of all the exchanges.’”

Not such a veiled threat? Aetna’s Mark Bertolini tells the DOJ what will happen if it blocks the Humana merger. After the DOJ sued to kill the deal, Aetna cut back even more.

In private talks with the DOJ, Aetna executives continually linked the two issues, even while they were telling Wall Street that the merger was “a separate conversation” from the exchange business. Bertolini seemed almost to take the DOJ’s hostility to the merger personally: “Our feeling was that we were doing good things for the administration and the administration is suing us,” he said in a deposition.

Bates found “persuasive evidence that when Aetna later withdrew from the 17 counties, it did not do so for business reasons, but instead to follow through on the threat that it made earlier.”

The threat certainly was effective in terms of its impact on the Affordable Care Act, since Aetna’s withdrawal has become part of the Republican brief against the law. That it says so much more about Aetna executives’ honesty and integrity probably won’t get cited much by GOP functionaries trying to repeal the law. Aetna is at least partially responsible for placing the health coverage of more than 20 million Americans in jeopardy; that it did so at least partially to promote a merger that would bring few benefits, if any, to its customers is an additional black mark.

If there’s a saving grace in this episode, it’s that the company’s goal to protect the merger hasn’t worked, so far. The DOJ brought suit, and Bates has now thrown a wrench into the plan. Aetna has said it’s considering an appeal, but the merger is plainly in trouble, as it should be.

Esquire

Thoughts From a Hospital Bed

And what it means to be healthy, or unhealthy, in the United States of 2017.

By Charles P. Pierce    May 3, 2017

I wasn’t awake for 30 minutes Wednesday morning before the panel on MSNBC’s Morning Zoo Crew made me wish that there was a procedure by which they could put my gallbladder back, just so they could take it out again. The subject was Hillary Rodham Clinton’s appearance at a woman’s conference on Tuesday. First, Harold Ford came on—and who’s more of an expert of losing winnable elections than Harold Ford, Jr.?—and said that, instead of talking about the election just passed, HRC should be out there talking about “what she would be doing as president.”

Just thinking about the reactions in many quarters, from this bunch, from The New York Times’ Washington Bureau, if she actually did this—She’s Delusional! She Thinks She’s President!—made me long to be back on Toradol again. (By the way, if you know anyone who wonders why NFL players do what they call “riding the T train” before every game, send that person to me. Toradol is very good at its job.) Then, Mika informed us that one of the major blunders of the Clinton campaign was that it didn’t realize that the arrival of Donald Trump “changed the moral calculus” of the race and would sideline Bill Clinton as a political asset. That got me longing to start the whole process again, perhaps with a rusty lawnmower blade.

I can’t leave you alone for a minute, America.

So anyway, this happened. Last Tuesday, I awoke in the middle of the night feeling as though I’d swallowed an ankylosaurus, spiked tail and all. (It was a good day for dinosaur news, because it’s always a good day for dinosaur news, but it wasn’t a good day for metaphorical dinosaur news.) That brought me to the emergency room. The next afternoon, I felt as though someone was pounding a railroad spike into my right side. After a series of tests that covered 14 hours and included an endoscopy, an ultrasound, an MRI, and a more elaborate MRI, it was determined that the ol’ gallbladder had run the race, that it had to come out, but that it had not made the argument for its removal in a conventional way. I had, as they said, “an atypical presentation of a common condition.”

New title for the memoirs!

So, anyway, this happened. Before relieving me of the offending organ, the surgeon and I were chatting, and he mentioned that, in college, he’d played defensive tackle at Trinity College in Connecticut, in which capacity he annually ran into a plucky offensive lineman named…Bill Belichick. So that was weird.

The staff at Newton-Wellesley Hospital, all of them, will always have my thanks and prayers. But although Jimmy Kimmel beat me to this by a couple of days, what continued to strike me over the past week was the fact that the critical element in my care was that I could afford it.

The critical element in my care was that I could afford it.

After a while, the Toradol and I conjured up a guy in Mississippi who worked in a plastics plant. (He also works at the local Piggly Wiggly to make ends meet.) Last Tuesday, he wakes up in the middle of the night with the anklyosaurus in his gullet. He probably downs an over-the-counter stomach medicine. The next day, at work, he feels the railroad spike’s being driven in. He has to make calculations in currencies with which I am not familiar and in which I am not fluent. Antibiotics exchanged for food, school fees bartered for an ultrasound. Or maybe he just soldiers through, day after day, until a chronic condition becomes catastrophic and the ankylosaurus breaks through into his life like the critter from Alien leaping from John Hurt’s chest. I really got to like this guy. I wished him well.

From this standpoint, with my Mississippi plastics worker hanging out at the side of my bed, I watched the Republicans fall all over themselves trying to destroy the Affordable Care Act while pretending they weren’t doing that very thing. (An atypical presentation of a common condition.) For a good, long, healthy while, I was completely one of The American People, my privileged view of our democratic follies clouded for a moment by more than just the pharmaceuticals. I was looking through a haze of frustration and pain, and considerable anger, for me and for my phantom pal from the plastics plant. Human health is not a commodity, to be bargained and sold and traded as though it were any other consumer good.

I was lying in a hospital, doped to the gills, chatting in my mind with an imaginary fellow citizen, and I could figure that out. Why in bloody hell can’t they? They’re out to wreck the only piece of effective legislation that made this a little easier for me and for my pal that has emerged in the last half-century. Everything about the proposed replacement is cruelly inadequate, because that’s what it was designed to be. The pre-existing conditions protections are cheesecloth; the high-risk pools are guaranteed to bring us back to the days of generally unaffordable premiums. It’s still a tax bill dressed up as healthcare reform, which is like calling a crop subsidy a law enforcement measure.

And hand things back to the states? To Sam Brownback’s Kansas, or Scott Walker’s Wisconsin, or even my phantom companion’s Mississippi? Somehow, doing this, bringing millions of Americans back to the brink of a cliff they’d almost forgotten over eight years, makes those Americans more free? This is crazy. I turned on the hockey game.

Human health is not a commodity, to be bargained and sold and traded as though it were any other consumer good.

The debate on the essential American political identity—which I contend began in all modern contexts with the belated acknowledgement of the rights granted to African-American citizens in the wake of the Civil War—has not even half-begun. The question of who we are as a nation is as unresolved as it ever has been. The value of the political commons—and the distribution of the benefits thereof—is still in a perilous place. The notion that the American republic is an ongoing experiment in self-government is one to which I still subscribe, but, dammit, these days, we seem to be closer than ever to the moment when that experiment turns to one of complete devolution, as we walk the republic back through all the mistakes of the past from which we’d thought we learned. Hell, the Greeks knew that social inequality was the route through which democracy turns to oligarchy. We were supposed to have learned that in 1787.

Also, in case you haven’t noticed, the president* of the United States is bughouse bananas and he’s getting worse.

So, anyway, all this happened. My family and I would like to thank you magnificent bastids, one and all, for the great outpouring of thoughts, prayers, good wishes, and raisings of the glass that came to us from all across the Intertoobz. There’s something stirring out in the land, I swear to god there is, and I’m glad we’re all here in this thing called life together.

So, anyway, that all happened. The shebeen is open again, praise be. God bless all here!

Respond to this post on the Esquire Politics Facebook page.

A look at the House Republican health care bill

Associated Press May 4, 2017

WASHINGTON (AP) — House Republicans on Thursday passed legislation to roll back much of former President Barack Obama’s health care law. The legislation would rework subsidies for private insurance, limit federal spending on Medicaid for low-income people and cut taxes on upper-income individuals used to finance Obama’s overhaul.

The nonpartisan Congressional Budget Office estimates that the Republican bill would result in 24 million fewer people having health insurance by 2026, compared to Obama’s 2010 statute.

Here are key elements of the bill:

__Ends tax penalties Obama’s law imposes on individuals who don’t purchase health insurance and on larger employers who don’t offer coverage to workers.

__Halts extra payments Washington sends states to expand Medicaid to additional poorer Americans, and forbids states that haven’t already expanded Medicaid to do so. Changes Medicaid from an open-ended program that covers beneficiaries’ costs to one that gives states fixed amounts of money annually.

__Erases Obama’s subsidies for people buying individual policies based mostly on consumers’ incomes and premium costs. Replaces them with tax credits that grow with age that must be used to defray premiums. The credits are refundable, which means they can go to people with little or no tax liability. Credits may not be used to buy policies that provide abortion coverage.

__Repeals Obama’s taxes on people with higher incomes and on insurance companies, prescription drugmakers, some medical devices, expensive employer-provided insurance plans and tanning salons. Obama’s law has used the revenue to help pay for expanded coverage.

__Requires insurers to apply 30 percent surcharges to customers who’ve let coverage lapse for more than 63 days in the past year. This would include people with pre-existing medical conditions.

__Lets states get federal waivers allowing insurers to charge older customers higher premiums than younger ones by as much as they’d like. Obama’s law limits the difference to a 3-1 ratio.

__States can get waivers exempting insurers from providing consumers with required coverage of specified health services, including hospital and outpatient care, pregnancy and mental health treatment.

__States can get waivers from Obama’s prohibition against insurers charging higher premiums to people with pre-existing health problems, but only if the person has had a gap in insurance coverage. States could get those waivers if they have mechanisms like high-risk pools that are supposed to help cover people with serious, expensive-to-treat diseases. Critics say these pools are often under-funded and ineffective.

___Provides $8 billion over five years to help states finance their high-risk pools. This late addition, aimed at winning over votes, is on top of $130 billion over a decade in the bill for states to help people afford coverage.

__Retains Obama’s requirement that family policies cover grown children to age 26, and its prohibition against varying premiums because of a customer’s gender.

___

Sources: U.S. Congress, The Associated Press, Kaiser Family Foundation

NPR Politics

GOP Health Care Bill Would Cut About $765 Billion In Taxes Over 10 Years

Scott Horsley   May 4, 2017  

The Affordable Care Act took money from the rich to help pay for health insurance for the poor. The repeal bill passed by House Republicans would do the opposite. The health care bill passed by the House on Thursday is a win for the wealthy, in terms of taxes.

While the Affordable Care Act raised taxes on the rich to subsidize health insurance for the poor, the repeal-and-replace bill passed by House Republicans would redistribute hundreds of billions of dollars in the opposite direction. It would deliver a sizable tax cut to the rich, while reducing government subsidies for Medicaid recipients and those buying coverage on the individual market.

Tax hikes reversed

The Affordable Care Act, also known as Obamacare, is funded in part through higher taxes on the rich, including a 3.8 percent tax on investment income and a 0.9 percent payroll tax. Both of these taxes apply only to people earning more than $200,000 (or couples making more than $250,000). The GOP replacement bill would eliminate these taxes, although the latest version leaves the payroll tax in place through 2023.

The House bill would also repeal the tax penalty for those who fail to buy insurance as well as various taxes on insurance companies, drug companies and medical device makers. The GOP bill also delays the so-called “Cadillac tax” on high-end insurance policies from 2020 to 2025.

All told, the bill would cut taxes by about $765 billion over the next decade.

The lion’s share of the tax savings would go to the wealthy and very wealthy. According to the Tax Policy Center, the top 20 percent of earners would receive 64 percent of the savings and the top 1 percent of earners (those making more than $772,000 in 2022) would receive 40 percent of the savings.

Help for the poor reduced

Over time, the GOP bill would limit the federal contribution to Medicaid, while shifting control of the program to states. Depending on what happens to costs, states may be forced to provide skimpier coverage, reduce their Medicaid rolls, or both. The Congressional Budget Office estimated that an earlier version of the bill would leave about 14 million fewer people covered by Medicaid by 2026. (The House voted on the current bill without an updated CBO report.)

CBO also anticipated fewer people would buy insurance through the individual market. With no tax penalty for going without coverage, some people would voluntarily stop buying insurance. Others would find coverage prohibitively expensive, as a result of changing rules governing insurance pricing and subsidies.

The GOP bill would allow insurance companies to charge older customers up to five times more than younger customers — up from a maximum 3-to-1 ratio under the current health law. The maximum subsidy for older customers in the GOP plan, however, is only twice what is offered to the young.

The bill also allows insurance companies to offer more bare-bones policies. As a result, young, healthy people could find more affordable coverage options. But older, sicker people would likely have to pay more.

In addition, because the subsidies offered in the Republican plan don’t vary with local insurance prices the way subsidies do in Obamacare, residents of high-cost, rural areas would also suffer. That could include a large number of Trump voters.