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U.S. judge finds that Aetna misled the public about its reasons for quitting ACA
- thephyber 10y agoI was pretty sure the news orgs I was following pointed this out at the time the merger was approaching its conclusion. I'm glad a judge with access to more information that the average news consumer was able to make a judgement and reduce the uncertainty around the claims (both Aetna's and the news coverage).
- mcheshier 10y agoWake me up when charges are filed.
- burkaman 10y agoI don't think this is really illegal. What would it be, libel against the Obama administration or something?
- mhurron 10y agoA company lying to further it's goals, well I never!
- tptacek 10y agoNote that both things can be true: that Aetna lost money in the individual marketplace (which would square with the experiences of other insurers in guaranteed-issue markets) and that their tolerance for loss was sharply influenced by support for their proposed merger.
- Macsenour 10y agoBut it wasn't true that they were losing money in all the markets they pulled out of.
- tghw 10y ago"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." It could be the case, but it seems that, in at least some of the markets, it was not. They were pulling out to try to invalidate the DOJs finding that the merger would produce insufficient competition.
- badlucklottery 10y agoIt could have been but it doesn't sound like that's the case. The evidence indicates that they just wanted an anti-competitive merger enough to leave profitable, competitive markets.
- azdesertbuddha 10y agoEven if this was true, which the article states it is not, isn't that the point of insurance? To spread the risk and cost across a geographic or demographic populace while making a reasonable, but steady profit?
- tptacek 10y agoI want to be clear that I'm not saying Aetna should have left unprofitable markets; I think, for instance, that it would be reasonable to require that any insurer wishing to offer group coverage in a state also offer individual market coverage. But the claim Aetna is making is that, at least in some of the markets it abandoned, it was making a net loss on insurance contracts.
- milliondollar 10y agoThis a million times over. Aetna makes huge money in the group business. By allowing insurers to take all the healthy people in group business, but absolving them from taking the sick people in a market, you essentially create smaller pools of "unprofitable" customers. But essentially it is a giant subsidy to the group insurance providers.
- djrogers 10y ago> Even if this was true, which the article states it is not, Not really: "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;" Again, both can be true...
- mattmanser 10y agoThough, again, it clearly says in the article it's not and they pulled out of states where they were profitable.
- AdmiralAsshat 10y agoTIP: If you're having trouble viewing the page because of the pop-up telling you to turn off your adblocker, Click the little 'i' by the address bar (Chrome only) and disable Javascript for the site.
- noobermin 10y agoAnd there is reader view for firefox users.
- burkaman 10y agoAm I misreading this, or are they forgoing profit purely out of spite? Or I guess the idea is they could make more profit in the long run if they generate enough bad publicity for the ACA. These quotes almost seem too on the nose to be real: > “I just can’t make sense out of the Florida dec[ision],” 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,” [the judge] found.
- marcell 10y agoNot quite. Based on the article, they threatened to withdraw if the DoJ did not support their proposed merger with Humana. The DoJ did not support it, so they followed through on their earlier threat. So it's not spite, but part of a negotiating tactic.
- gleb 10y agoACA was designed to drive consolidation. Because large companies are easier for the government to control. Source - ACA author: http://www.wsj.com/articles/i-was-wrong-about-obamacare-1469997311 http://www.wsj.com/articles/i-was-wrong-about-obamacare-1469... (How I Was Wrong About ObamaCare: The law’s drafters wanted consolidation) Which why, all of a sudden, all the hospitals are buying each other, and insurance companies are buying each other. It seems Aetna felt that the government didn't live up to its side of the bargain.
- burkaman 10y agoOk, but on its own that doesn't make sense as a business decision. Assuming they are profit-driven businesspeople, they either they thought their best option was to try and sabotage the ACA, or they really thought this would work as a negotiation tactic, which seems absurd.
- gleb 10y agoWhy does it seem absurd as a negotiation tactic? They use what leverage they have against the government.
- attaboyjon 10y agoOn paper, none of the Star Wars movies ever made a cent of profit. On paper, Google and Facebook had not profits in America. ACA insurance profit are loss are similar. With enough creative accounting the business could be made unprofitable to squeeze concessions from the Obama administration. Look at all the major insurers stock price since Obamacare began. That will tell you all you need to know about this story. If you think they are making all that money because the non-ACA health insurance business suddenly got real good, I have a bridge to sell you.
- deleted 10y ago[deleted]
- JamisonM 10y agoThe trade off that made the ACA possible was clear to everyone at the beginning: The mandate will bring the insurance companies more customers and that will help pay for the sicker customers they will have to cover. If it doesn't work out the federal government will be backstopping their losses. Optimism around insurance stocks reflected in their stock prices was all about larger volumes making up for smaller margins and lower risk, there is no tricky misdirection going on here. That is "all you need to know about this story".
- brutus1213 10y agoI've heard of these accounting shenanigens. If you are ever faced with a contract where you get "residuals"/net-profit, how do you protect yourself?
- deleted 10y ago[deleted]
- gamblor956 10y agoAll of the Star Wars movies made profits for their distributor. The accounting loss was recorded only in the special-purpose holding company (SPHC) that was specifically set up to disburse profits to net-profit participants. To ensure that this type of entity has no profits, all production and distribution expenses of the studio and distributor are generally charged to this entity, usually in advance lump sums. The studio and distributor record and are taxed on their income. In many cases, any licensing income is earned by a separate but related company that paid the SPHC for the rights to re-license the film (but usually the distributor also acquires licensing rights). The SPHC is generally a profit-participant in the licensing company, but its share of the licensing profits usually varies based on industry politics (i.e., leverage). A-listers with sufficient leverage and competent representation can sometimes participate in the profits...of the distributor. It's not enough to get gross profits since gross profits take into account COGS/COSS. What you really want is "first-dollar gross", meaning "gross income" before distributor expenses. For example, say, "Gravity 2" makes $100m at the box office. That $100m is first-dollar gross. If WarnerBro's COGS were $80m, gross profits were only $20m. If Sandra's share of profits was 1% of first-dollar gross, she's looking at $1m; but if she only had a gross-profits participation, she's looking at only $200k. If Sandra was a net profit participant, she wouldn't make anything at all since Gravity Special Purpose Movie-Making Entity has an $X million dollar loss related to production expenses for making the movie and the distribution expenses WarnerBros is expensing to it. [source: I do this. But not for WarnerBros or Gravity, those are just examples that are easily Googled if you want to follow up with your own research.]
- ddp 10y agoI'm for universal healthcare but the ACA is collapsing in many states. I happened to ride back to Santa Fe with the CEO of Blue Cross of Omaha who told me that BC/BS of NM lost $100m on the ACA in 2015. That's a lot of money for anyone to lose. He believed there were a few relatively simple fixes that would go a long way to bring some sanity to the system. And let's face it, tax penalties are not the way to achieve health coverage for all Americans. Boo on Obama for not even bothering to try for Universal Healthcare...
- bojl 10y ago>Boo on Obama for not even bothering to try for Universal Healthcare... He tried to include the public option but it only had 59 votes to the 60 required to pass it
- venomsnake 10y agoYou only need 51 votes. If Democrats really cared they could have just sit in the senate until the republican speakers collapsed. And it would have gotten to a vote. It may have taken a couple of days but whatever. Edit: Can anyone explain the downvotes please? A filibuster can be overcome by just siting and listening to the other side until they can no longer speak from exhaustion.
- maxerickson 10y agoThey can trade off speaking during the filibuster. Say only 20 of the minority decide to be completely intransigent. How many weeks do you think it will take to exhaust them when they each only need to speak for ~9 hours a week to maintain the filibuster?
- venomsnake 10y agoThey don't have the right to leave the senate hall I think. So I do think they will have to make number one and two from time to time. The answer also is as much as needed.
- GiorgioG 10y agoI've said it before, we need a single payer system. Insurance companies and Pharmaceutical companies can more or less dictate the prices they'll charge because if you're chronically ill, you can't just choose not to be treated (unless you're ok with dying.) This behavior should not be surprising. Until the American people get pissed off enough, we'll continue to have these shenanigans.
- burkaman 10y agoObama said that too, once. I think most Democrats in office have said that at one point, even if they don't want to say it in public anymore. The ACA was not passed because it was better than single payer, it was just the closest thing that could possibly get through Congress.
- Fomite 10y agoI think this is the greatest obstacle to the "...and Replace" part of Repeal and Replace. The ACA was already the workable compromise.
- GiorgioG 10y agoWorkable politically, practically it's been completely ineffective in reducing healthcare costs.
- ejstronge 10y agoThe ACA's goal was not to rein in healthcare spending (this potential shortcoming was discussed before it even passed). While there is funding for experiments aimed at reducing costs, none of the bill's major facets deal with this issue. Here's an article where one of the bill's intellectual architects talks about the topic: http://www.nejm.org/doi/full/10.1056/NEJMp1006571 http://www.nejm.org/doi/full/10.1056/NEJMp1006571
- deleted 10y ago[deleted]
- kapauldo 10y agoThere are 2 simple things we can do to fix health care. First, make it like public school. If you want to pay for private school, go ahead, but health care should be socialist like school and sewage. 2nd, make it illegal for the AMA to limit the number of doctors admitted to med school. Its a cartel that reduces supply.
- avn2109 10y agoNot an expert but I'm pretty sure the AMA gates the number of residency seats and then the schools take the hint and gate admissions numbers independently.
- wyager 10y ago> First, make it like public school. We can learn from our mistakes there and, if we really feel we need to make medicine socialized (as opposed to deregulated like the excellent private healthcare in Mexico or India), we can at least do it on a voucher-based system. Everyone gets $x tax money a year to spend on medicine, and you can choose where to spend it.
- Gracana 10y agoWhat if you need more than you're allowed?
- wyager 10y agoWhat if you need more than the government is willing to spend on you in the "public school" scenario? I had a longer, more detailed response, but I realized that what you asked isn't really a fair question. In the end, the answer is "you die", and by elaborating on that it made it sound like I agreed that this isn't an issue in socialized medical care.
- Gracana 10y agoI figured you'd want to say more about it because that obviously doesn't work. But.. OK.
- MR4D 10y agoShameless misdeed by a greedy corporation. That being said, I fail to understand one thing about those who propose a single payer system (and I mean this with all sincerity): If we cannot afford to pay for doctors, hospitals, and medications, how can we afford to pay for doctors, hospitals, medications, plus a bureaucracy to manage all of it? To me, "negotiating" better deals doesn't work. As a single payer system, that's just a rephrasing of "price controls". It seems game theory could be put to good use here, as life is effectively a single round game where many (most?) participants will spend everything they can for the game to not end (i.e. extend their lives and postpone their death). This one attribute seems destined to really challenge insurance of any kind (including single payer) given the large aging demographics in the US (aka "Baby Boomers").
- antisthenes 10y ago> If we cannot afford to pay for doctors, hospitals, and medications, how can we afford to pay for doctors, hospitals, medications, plus a bureaucracy to manage all of it? The same we are doing it now. Do you think the insurance companies are not bureaucracies? A regulated monopoly is the most efficient form of bureaucracy, because of efficiencies of scale. Also, insurance companies still generate profits, profits that can directly go towards health care, instead of being used as an investment cushion or for god knows what. Also, having every single person under 1 health care umbrella is a systematic reduction in risk, which further lowers costs.