Aetna trial day 10: what you need to know

December 16, 2016

  •  The witnesses for today were Katherine Coleman (Director of the Medicare Drug & Health Plan Contract Administration Group at CMS), Kevin Counihan (Director and CEO of Marketplace at CMS), Shawn Guertin (Executive Vice President and Chief Financial Officer at Aetna), and David Horst (Executive Director at Aetna). 

  • Katherine Coleman testified that CMS seeks to protect beneficiaries in Medicare Advantage (MA) and if the Aetna-Humana merger is approved, CMS will do its best to promote and protect innovation. In response to DOJ questioning, she said that CMS regulations aren't a good substitute for antitrust enforcement. 

  • Kevin Counihan said that building the rules for the health exchanges was difficult and folks should not expect to get it right the first time. In response, the defense pulled up emails from CMS saying that major companies were leaving money and leaving the exchange. Additionally, emails showed that Aetna and Humana were getting far less reinsurance and risk adjustment payments from CMS then expected.

  • The defense also argued that there was a risk the ACA subsidies would soon end because of a lawsuit by the House of Representatives. When questioned by DOJ, Kevin responded that the exchanges were like a store, and that competition and consumer choice were vital for them to work. Also, he questioned the timing of Aetna's withdrawal from the 11 exchanges, saying it was peculiar.

  • Shawn Guertin testified that Aetna originally saw the exchanges as a great opportunity and wanted to make them work. However the exchange pools are sicker and smaller then they anticipated, there aren't enough people to make the payments, and Congress isn't fixing the law. He concluded that the exchanges in a death spiral. 

  • DOJ countered with emails that showed Aetna executives thought the exchanges were a good investment, and that Aetna withdrew from Florida even though its exchange business was very profitable ($36 million in 2016). Shawn did not attempt to challenge these facts, but said that one individual state didn't counter the rest of the market. 

  • The last witness was David Horst, who testified about the efficiencies that would supposedly result from the merger. However, he said very little of substance--Aetna has put together teams to find synergies, which include better utilization of contracts, IT, networks, and marketing. He did not explain what they were in detail. The one phrase Horst kept repeating was that it would be similar to the Coventry merger. 

 

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