CEOs at Aetna, Anthem Help to Reshape Health-Insurance Industry

CEOs at Aetna, Anthem Help to Reshape Health-Insurance Industry

The unprecedented tandem deals could reshape industry into one topped by three giants

By Anna Wilde Mathews, Wall Street Journal

July 29, 2015 6:55 p.m. ET

41 COMMENTS

The leaders of the top five health insurers periodically get together to discuss policy issues, Aetna Inc.Chief Executive Mark T. Bertolini told investors in a private meeting earlier this month. The group had a nickname, he joked: the G5.

Soon, that could be down to the G3.

The change would come thanks to Mr. Bertolini, who has struck a $34 billion deal for Humana Inc.,and Anthem Inc.CEO Joseph Swedish, whose company is seeking to acquire Cigna Corp.for $48 billion. The unprecedented tandem deals could reshape the industry into one topped by three giants, each with more than $100 billion in annual revenue. UnitedHealth Group Inc.would be the third major player and still the largest by revenue.

First, though, Mr. Bertolini and Mr. Swedish will have to run a gantlet of regulatory, political and operational challenges, sharing a joint spotlight that could make each of their jobs harder as they make a case for their combinations.

The Justice Department has signaled that it would look at large concurrent transactions in the managed-care industry together, a dynamic that experts said could complicate both deals’ path to approval. Hospital and doctor groups have already weighed in against the acquisitions, while two congressional committees have scheduled hearings for the fall.

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The two men come from very different backgrounds. Mr. Bertolini, 59 years old, is a high-profile, often blunt-spoken insurance-industry veteran, known partly for his public recounting of how his own experience of recovering from a devastating ski injury shaped his approach to health care.

Mr. Swedish, 64, spent nearly his entire career running hospital companies, before arriving at Anthem in 2013 and quickly making a mark, partly by jettisoning its former corporate name of WellPoint Inc.

Both CEOs say their past experience shepherding major deals is shaping their approach to their current tasks, and they have embarked on outreach campaigns.

“You’re going to see some real similarities in terms of their leadership styles,” said Anthony R. Tersigni, chief executive of Ascension, one of the largest hospital operators in the U.S. Mr. Tersigni knows both men.

Mr. Bertolini had long had his sights set on Humana. “I’ve had a playbook on my desk since I became CEO, and Humana’s always been at the top of that list.”

The Aetna deal would create by far the biggest player in the private-insurer version of Medicare, so concern over market concentration will focus on the companies’ footprint in that business, known as Medicare Advantage. Mr. Bertolini said that the vast majority of Medicare Advantage consumers have at least five options currently, so “we don’t see a reduction in competition for consumers” from the Humana deal.

He argues that the merged company will be better positioned to work closely with health-care providers and the federal government to bring down costs and improve quality. “We have an opportunity to change the trajectory of health-care costs,” he said.

Mr. Bertolini says he knew Humana CEO Bruce D. Broussard partly from the regular CEO gatherings, though he says they didn’t focus on corporate matters during those meetings, which included antitrust attorneys.

In late March, he and Mr. Broussard sat down for a one-on-one breakfast. The two men met on a rainy day near Newport, R.I., where one of Mr. Broussard’s children was competing in a sailing event.

Mr. Broussard’s wife was in the hospital after some flulike symptoms had worsened, and Mr. Broussard kept glancing at his phone for updates. The situation “built some camaraderie,” said Mr. Broussard, as they talked over the possibility of a deal. Both men said they found common ground during the conversation. “I kept saying, yeah, I agree, yeah, I agree,” Mr. Bertolini said. Mr. Broussard said his wife’s health is now fine.

Messrs. Bertolini and Broussard declined to comment on details of deal negotiations, including approaches from other companies. Cigna was interested in Humana as well, people with knowledge of the matter have said, while UnitedHealth approached Aetna.

Mr. Broussard said Humana’s leaders were reassured that Mr. Bertolini had maintained elements of Coventry Health Care Inc.’s operations after acquiring it.

Mr. Bertolini, for his part, said he learned from the aftermath of Aetna’s mid-1990s acquisition of U.S. Healthcare. That integration “blew up,” he said, when the managers of the acquired company took over much of the merged operation and didn’t respect Aetna’s traditional culture.

Since he unveiled the Humana acquisition, Mr. Bertolini has been calling and meeting with state and federal officials, as well as Aetna and Humana employees, answering questions and laying out the rationale for the deal.

On the Monday following the Friday, July 3, deal announcement, he visited officials in Humana’s base of Louisville, Ky., where it has long been a major employer. By then, Kentucky Sen. Mitch McConnell, the Senate majority leader, had already released a skeptical statement about the Aetna deal. After his visit, Mr. Bertolini tweeted a thank-you to the state’s governor and Louisville’s mayor, then retweeted both officials’ own comments about the meetings.

A few weeks later, Mr. Swedish announced that Anthem would acquire Cigna. The announcement came after drawn-out talks that, Anthem has said, date back to last summer. In June, Anthem went public with its bid, which Cigna soon publicly rebuffed.

In the end, Mr. Swedish’s tough tactics won out. Now, he faces similar challenges to those faced by Mr. Bertolini. Scrutiny of the Anthem deal is likely to focus on the powerful position the combined company would have in coverage sold to employers. Together, they would have the largest overall enrollment of any U.S. insurer.

The Cigna acquisition would remove one of the quartet of major health insurers that serve national companies. Going from four to three “is a big drop-off,” said Brian Marcotte, chief executive of the National Business Group on Health.

Mr. Swedish also will contend with an added wrinkle. As a licensee of the Blue Cross Blue Shield Association, Anthem must adhere to the group’s rules, which cap the share of revenue that can come from insurance business that isn’t under the Blue brand.

Mr. Swedish said he believes both challenges are manageable, and that the Cigna acquisition will benefit consumers, employers and health-care providers. Like Mr. Bertolini, he has been reaching out to state and federal officials.

In a meeting, he told Anthem employees that the deal assured their company would endure as one of the big three insurers, parallel to the three big American car makers. “I did not want our company to be the American Motors of the health-care industry,” he said, referring to the defunct manufacturer. Anthem would be “a survivor, a competitor,” he said.

On the same day he announced the Cigna acquisition, he had a conference call with the Blue association and the leaders of the other Blue insurers, who serve on its board. He emphasized Anthem’s commitment to its Blue affiliation, he said, and he felt “confident they recognized the value of this combination.”

The association said that it routinely reviews acquisitions involving its members “to ensure compliance with the standards that the Blue Cross and Blue Shield brands have established over generations.”

Though Mr. Swedish is new to the insurance industry, associates point out that he has a record of deal-making from his hospital days. Before arriving at Anthem, Mr. Swedish engineered the merger of his large Catholic hospital system, Trinity Health, with a rival, Catholic Health East.

In addition to boards of directors and Catholic Health East’s leaders, Mr. Swedish had to secure the blessing of the Catholic church, and he jetted around the country meeting with local bishops, eventually winning their backing, according to former Trinity executives. “He was the primary communicator and leader of the message as to why this would work,” said Kedrick D. Adkins Jr., a former Trinity official who is now chief financial officer of Mayo Clinic.

Wednesday, Anthem reported earnings in line with a preannouncement it made when it unveiled the Cigna deal. Humana, which had also previewed its earnings and downgraded its projections for 2015, did slightly better than the reduced guidance.

—Liz Hoffman contributed to this article.

D.C.-area motorists lose their ‘gunslinger’

Transportation

D.C.-area motorists lose their ‘gunslinger’

By Katherine Shaver July 25

For 21 years, Lon Anderson has considered himself a “gunslinger” against traffic jams, a “gladiator” against drunken driving and the “staunch defender” of nearly 4 million beleaguered motorists.

As director of public and governmental relations for AAA Mid-Atlantic, Anderson has been the Washington region’s most visible and influential motorist advocate, verbally flogging area governments to crack down on unsafe drivers, fix dangerous roads and ease some of the worst gridlock in the nation. His weapon: catchy, go-for-the-throat sound bites that the media — and lawmakers — simply can’t ignore.

He’s accused “money-grubbing” District officials of turning one particularly profitable speed camera into “an old-fashioned, money-making, motorist rip-off speed trap right out of ‘The Dukes of Hazzard.’ ” Public officials in “Rip Van Maryland,” he says, have snoozed while Virginia has added express toll lanes to the Capital Beltway and built the Silver Line Metrorail extension.

His table-smacking interjections of “Outrageous!” have drawn gavel-pounding from legislative committee chairmen and earned him the nickname “the reverend.” Friends describe him as passionate — and laughingly agree with one veteran transportation journalist’s description of Anderson years ago as “the Billy Graham of the roadgangers.”

“He’s been a real mainstay in the region and one of the main voices for better transportation,” said former Montgomery county executive Doug Duncan (D). “A lot of people complain about it, but very few people advocate for solutions. He’s been that voice for a long, long time.”

Anderson, 66, is set to retire from AAA at the end of this month, but not before he lets a few more zingers fly at the government agencies he blames for the Washington area’s teeth-gnashing traffic.

“You don’t get to have the worst congestion in the United States without decades of bad decisions,” he said recently at AAA Mid-Atlantic’s offices in downtown D.C. “If they make a bad decision, I’m going to pounce on it and throw a punch.”

Yes, cycling has surged in the District, and suburbs are seeing millennials and empty-nester baby boomers gravitate to more walkable, transit-oriented communities so they can drive less — or not own a car at all.

But 72 percent of Washington-area residents still commute by car, and another 12 percent who use carpools or buses also rely on the roads. While many people think of AAA as a roadside assistance service, it also is one of the most influential advocacy groups in transportation politics. Anderson reminds politicians that his group represents 3.7 million motorists in the District, Maryland, Virginia, Delaware and parts of New Jersey and Pennsylvania.

“On the power index, he was at the higher end,” said Jim Dinegar, president of the Greater Washington Board of Trade. “He represented a very powerful group, and he gave voice to it. . . . If, by God, Lon opposed your legislation, he’d come at you with everything AAA had — and that was quite a bit. And if he supported you, he’d throw the full weight of the organization behind you.”

Anderson has his detractors, mostly among transit and cycling advocates who clashed with him over street space for bike lanes and his calls for another Potomac River crossing beyond the chronically congested American Legion Bridge.

Stewart Schwartz, executive director of the Coalition For Smarter Growth, said Anderson is “very good with a quip” but “out of date” on transportation policy. Schwartz said the “outer Beltway” bridge Anderson wants would suck up billions of dollars needed for mass transit and lead to more sprawl development and, in turn, more traffic.

“Almost more than anyone else,” Schwartz said, “he’s never met a highway he didn’t like.”

Moreover, Schwartz said, Anderson has had an “inherent conflict of interest” because AAA relies on dues-paying motorists.

“That means he’ll support policies that result in more people driving more,” Schwartz said. “That could color your comments on transportation policy.”

But others say they have seen Anderson, along with AAA Mid-Atlantic, evolve from no-holds-barred road advocates to supporters of a more balanced approach that includes the need for better transit and pedestrian and bike safety. AAA Mid-Atlantic supported construction of the Silver Line and has embraced plans for a light-rail Purple Line in Maryland.

“I think there was an evolution in his thinking,” said David Snyder, vice mayor of Falls Church and a longtime member of the region’s Transportation Planning Board. “The reality is you can’t simply put down more asphalt.”

D.C. Council Chairman Phil Mendelson (D), another longtime transportation board member, said Anderson and his group became “less strident” over the years.

“I think they realized that if you want to drive your car,” Mendelson said, “the whole system has to work.”

The way Anderson sees it: More people riding mass transit means fewer clogging the roads for those who have to drive. In turn, more free-flowing roads provide better transit service for bus passengers. He notes that he’s an avid walker — he works to get in his 10,000 steps daily — and that AAA Mid-Atlantic recently extended its roadside assistance program to bicyclists.

“But will walking and cycling replace the need for roads to offer mobility to cars and buses?” Anderson said. “No. . . . And transit can’t replace the need for automobiles.”

Anderson has had much of his influence as a vocal critic. One of his biggest beefs: His belief that the District government has declared “war on motorists” by placing some speed cameras to make money for the city rather than improve safety. The number of parking tickets the city writes also gets him riled up.

“People come to Washington to see the cherry blossoms,” he said in a booming voice, “but they have a better chance of seeing pink [citations] under their windshield wiper.”

He is unapologetic about seeking media coverage to promote his group’s agenda. He said he knows from his early years as a journalist — he was a reporter for the Frederick News-Post and once owned a weekly newspaper in Damascus — what reporters are looking for: accurate, quick information and frank quotes.

He made himself so available to reporters that his wife, Claudia Tidwell, said she is most excited at the prospect of soon dining out without her husband leaving the table for a restaurant parking lot interview.

“This is a town where everyone wants to be in the media and be quoted,” Anderson said. “If you want to rise above the chatter, you’ve got to be good.”

His biggest disappointment: leaving the job without persuading Virginia lawmakers to make driving without a seat belt a primary offense. Under current law, police can only cite motorists for failure to wear a seat belt if they stop them for another violation first.

Among his proudest accomplishments: persuading Maryland lawmakers to strengthen the state’s vehicular homicide law and leading a successful campaign in the 1990s for safety barriers on the George Washington Parkway after a string of fatal head-on collisions.

Addressing his team of 16 AAA employees at his recent retirement party, Anderson grew teary and barely choked out, “We’ve saved a lot of lives.”

Anderson said he and his wife will move soon from Silver Spring to West Virginia, where they plan to spend more time hiking in the mountains than stewing in traffic. He might even try his hand at blogging.

“I think,” he said, “I still have a few things to say.”

Robert Thomson contributed to this report.

Katherine Shaver is a transportation and development reporter. She joined The Washington Post in 1997 and has covered crime, courts, education and local government but most prefers writing about how people get — or don’t get — around the Washington region.

In nation’s capital, $15-hour minimum wage is headed toward 2016 ballot

D.C. Politics

In nation’s capital, $15-hour minimum wage is headed toward 2016 ballot

By Aaron C. Davis July 22

A historic measure to raise the District’s hourly minimum wage to $15 is headed toward next year’s ballot after city officials released a ruling Wednesday approving a voter initiative that places the nation’s capital at the center of a wage fight taking place in cities across the country.

If approved, the initiative would lift Washington’s minimum wage above every other city’s on the East Coast. It would push the District into a burgeoning, urban liberal vanguard on higher wages that includes Seattle, San Francisco and Los Angeles.

The ballot measure will go to voters in November 2016 only if supporters collect enough signatures, but even opponents say that is likely. It is one of several efforts moving ahead across the nation; also Wednesday, a state panel in New York approved raising the hourly rate to $15 for fast-food workers.

The day’s developments show that organized labor groups continue to gain ground rapidly on the issue, roiling pro-business groups and prompting a heated debate among both Republican and Democratic candidates for president.

In D.C., the minimum wage is $10.50 and is scheduled to rise to $11.50 next year. If the initiative passes, the new $15 hourly rate would raise a full-time worker’s annual pay to more than $31,000, up from the current minimum of about $22,000.

In one of the most expensive cities in the nation, where the median monthly rent for a one-bedroom apartment is $2,000 and where studies show that wage disparities are among the largest in the nation, the boost is not an unaffordable luxury but a necessity of survival, advocates say.

“People should not work a full-time job and live in poverty,” said Delvone Michael, director of the D.C. chapter of the Working Families Party, part of a group of labor unions and other progressive groups backing the measure.

Business groups warned that such measures would jeopardize jobs and cause businesses to close. The National Restaurant Association, which formed a group called Save NY Restaurants to try, unsuccessfully, to push off Democratic Gov. Andrew M. Cuomo’s plan to raise wages, warned of layoffs, automation and worse.

“Fifteen dollars is going to change the way restaurants do business,” said restaurant association spokeswoman Christin Fernandez. “They are going to be forced to cut labor, to automate, and for some, possibly, they may need to close.”

Fernandez warned of more kiosks, tablets and other uses of technology to take orders and check out customers in an industry that often operates on single-digit profits.

“There is a very low barrier to entry in restaurant work,” she said. “We hire young workers and people who might not have an entry to the workforce otherwise. Many of our members say they will not be able to continue to hire unskilled workers at $15 an hour.”

The D.C. measure moved ahead Wednesday after a ruling by the city’s election board, allowing proponents to begin a petition drive that is widely expected to succeed.

Several D.C. business groups opposed to the ballot measure urged the Board of Elections in briefs and testimony to reject it. The D.C. Chamber of Commerce released a poll of business owners in which more than half of the respondents said they would cut jobs if the minimum wage rose to $15.

In its ruling, the board rejected every argument by opponents.

“While the Board recognizes and can appreciate the concerns of small business owners who bemoan the prospects of increased operating costs, the Board is not authorized to reject initiatives due to financial hardships on private business owners,” the ruling stated.

Supporters must now gather about 23,200 signatures, or 5 percent of District voters, to qualify the measure for the ballot. Proponents said they are confident of clearing the signature hurdle and of prevailing at the polls. A public opinion poll commissioned in the spring by advocates showed support in the District for a $15 minimum wage at about 70 percent.

“I think it’s so popular because middle-class folks are feeling squeezed, too. Everyone understands this is an issue,” said Michael, of D.C. Working Families.

Wednesday’s developments were sure to add to the debate over the minimum wage that has already infused the 2016 presidential contest.

On Wednesday, Sen. Bernie Sanders (I-Vt.), a Democratic presidential contender, introduced a bill along with four congressional Democrats to set a national minimum wage of $15 an hour. He then addressed hundreds of striking low-wage workers outside the U.S. Capitol, calling the current federal minimum of $7.25 per hour a “starvation wage.”

Another Democratic presidential primary candidate, former Maryland governor Martin O’Malley, also recently endorsed a $15 national minimum wage, outdoing the state increase to $10.10 that he supported just last year as governor. (Virginia uses the federal minimum of $7.25.)

The overwhelming leader of the Democratic pack, Hillary Rodham Clinton, has not been precise about what figure she thinks is appropriate, either for local jurisdictions or nationally. She has given arm’s-length support to the $15 idea by dialing into a labor group forum in Detroit last month. But on a recent campaign stop in New Hampshire, she said she supports $15 an hour “in certain localities,” such as New York or Los Angeles — but not necessarily everywhere because of “different economic climates.” Clinton is expected to give a speech on wages later this summer.

On the Republican side, Wisconsin Gov. Scott Walker garnered headlines in his first weeks on the GOP presidential campaign trail by blasting the existence of any minimum wage as “lame” and serving “no purpose.”

The District’s proposed minimum wage could tee up another showdown between the city’s Democratic majority and its Republican overseers in Congress.

Although some bipartisan support exists on Capitol Hill for raising the minimum wage, a $15-per-hour rate is viewed by many conservatives as an affront to market economics. As they tried this year with the District’s marijuana legalization effort, congressional opponents could use their oversight powers to block the ballot measure from taking effect.

The D.C. measure would mirror Seattle’s by phasing in a flat $15-per-hour minimum wage by 2020. That would be 30 percent higher than the $11.50 rate that the D.C. Council and mayor, as well as adjacent counties in Maryland, agreed to last year.

Almost 43,000 District workers, or 7 percent of the city’s workforce, now earn less than $12 an hour.

As in San Francisco, the measure would also for the first time force D.C. restaurants to pay workers the minimum wage plus tips. Restaurants in the District are required to pay only $2.77 per hour, as long as tips bring servers up to the equivalent of the minimum wage.

Beginning in 2025, D.C. restaurant workers would be due $15 an hour plus tips. The minimum wage would also be indexed to inflation.

Unlike in New York, where Mayor Bill de Blasio (D) has been a forceful proponent for boosting pay, D.C. Mayor Muriel E. Bowser has remained noncommittal about supporting the $15 initiative.

As a council member in 2013, Bowser (D) voted for an increase to $11.50 an hour by 2016. At the time, that appeared likely to make the District’s minimum one of the highest in the country. But the District was quickly eclipsed.

The proposal that advanced Wednesday in New York would effectively split the state’s minimum wage into two tiers, one for those working at restaurants and the existing wage of $8.75 for everyone else. Advocates for the poor said they hoped the move would create unbearable pressure on retail and other low-wage industries to also boost pay.

The increase for fast-food workers will occur first in New York City in 2018 and then statewide in 2021.

Lydia DePillis contributed to this report.

U.S. News releases its hospital rankings. Here’s how your local hospital fared.

U.S. News releases its hospital rankings. Here’s how your local hospital fared.

Jul 21, 2015, 12:01am EDT Updated: Jul 21, 2015, 7:15am EDT

Courtesy Photo

MedStar got props for two nationally ranked facilities, with both its Washington Hospital Center and MedStar National Rehabilitation Hospital earning the top honors this year.

Tina Reed

Staff Reporter- Washington Business Journal

Inova Fairfax Hospital ranked first in the Washington region — topping MedStar Washington Hospital Center for the fourth straight year — in the latest U.S. News and World Report rankings released Tuesday.

But MedStar got props for two nationally ranked facilities, with its MedStar Washington Hospital Center and MedStar National Rehabilitation Hospital earning the top honors this year. The hospitals were among 137 hospitals, or about 3 percent, of about 4,700 hospitals analyzed for the Best Hospitals listing to earn a national ranking in at least one specialty.

Of course, ranking systems have their limitations. Earlier this year, a study found rankings can generate confusion among consumers, especially if they don’t understand the different things organizations say they are trying to measure. U.S. News points out its rankings are meant to rank hospitals based on specialties, using data such as death rates for patients who represent especially challenging cases, patient safety and other measures of performance that can be assessed.

For those who are curious how local hospitals stacked up, here’s the latest according to U.S. News:

  • Inova Fairfax came in first locally, ranked nationally at No. 30 in gynecology. It also was rated "high-performing" in eight other adult specialties.
  • MedStar Washington Hospital Center ranked second in the region and nationally at No. 39 for its cardiology and heart surgery program. It was rated "high-performing" in three other adult specialties.
  • MedStar Georgetown University Hospital, Mary Washington Hospital and Inova Fair Oaks Hospital tied for third in the region. MedStar Georgetown has three "high-performing" adult specialities," Mary Washington has four "high-performing" adult specialties and Inova Fair Oaks has one.
  • Sibley Memorial Hospital and Inova Mount Vernon Hospital tied for sixth place. Sibley Memorial has no "high-performing" adult specialties. Inova Mount Vernon has one.
  • Virginia Hospital Center ranked ninth in the metro region with one "high-performing" adult specialty.

In Baltimore, Johns Hopkins tied for third place overall on U.S. News & World Report’s annual hospital "Honor Roll’ with UCLA Medical Center. Massachusetts General Hospital in Boston took first, bumping Rochester, Minnesota’s Mayo Clinic to second this year.

MedStar National Rehabilitation Hospital was ranked No. 13 in the nation in rehabilitation. It was unranked regionally.

U.S. News Best Children’s Hospitals came out in June. Children’s National was on its Honor Roll and ranked "high performing" in 10 specialties.

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

A streetcar named incompetence

The Post’s View

A streetcar named incompetence

By Editorial Board July 18

A REPORT detailing the latest fixes that need to be made to the District’s long-delayed streetcar line said none of the problems appear to be critical issues that would prevent operation of passenger service. That’s of small comfort to D.C. taxpayers shaking their heads at the utter incompetence that has gone into the planning and execution of this project. Many no doubt are wondering if the city isn’t just throwing more good money after bad in an effort to salvage a doomed project.

Experts called in by the city to assess the 2.2-mile trolley line on H Street and Benning Road in Northeast pointed to numerous problems confronting a project that is now five years — and many millions of dollars — overdue. Inadequate training procedures, doors scratching against the platforms, confusing signage, safety concerns and no one in charge were among the issues cited in the report from the American Public Transportation Association. Most confounding as an example of the lack of common sense was the decision not to install underground heaters, causing streetcars to be frozen in their tracks. Did the folks at the District Department of Transportation not think about what happens in D.C. during winter?

Transportation Director Leif A. Dormsjo, who arranged for the outside review after he took office with the incoming administration of Mayor Muriel E. Bowser (D), said the problems are being addressed and expressed confidence the system will open this year. Assuming he’s right about working out the bugs (and we can’t help but think of similar confidence expressed by the previous administration), there are still questions about whether the fundamental design of the project — including the lack of a dedicated lane on a crammed street with no connection to other transit — is so flawed that there is little chance of success.

Other questions: Did officials let romantic notions about bringing trolleys back to the streets of Washington silence legitimate questioning of the project? Are streetcars the most efficient and effective means of mass transit? And, most critically, does it really make sense to consider an expansion of this system? The missteps that are so evident in this project’s history should give real pause to city officials considering any further expenditures.

D.C. residents to lose some insurance options next year on health exchange

D.C. residents to lose some insurance options next year on health exchange

By Aaron C. Davis, Washington Post, July 10

District residents who want to purchase individual insurance plans on the city’s health exchange will have fewer options next year.

In fact, individuals searching for more flexibility than that offered by health maintenance organizations will have just one carrier to choose from — and the cost for some of its plans may jump by double digits.

Aetna Life Insurance has begun sending hundreds of city residents letters warning that plans purchased through the city’s health exchange, known as D.C. Health Link, will terminate at the end of the year.

The company is the smaller of two that now offer plans known as Preferred Provider Organizations, or PPOs, which give D.C. residents some freedom to choose their doctors and hospitals.

The changes highlight the city’s struggle to operate one of the smallest independent health exchanges begun under President Obama’s Affordable Care Act. It has also raised uncertainty among the District’s many self-employed, under-employed or retired workers, who need to purchase their own insurance, as to whether they will be able to afford comparable coverage next year.

In the letters, Aetna says it “determined we can no longer meet the needs of our customers while remaining competitive in the market.”

The company’s decision will leave the region’s dominant insurance carrier, CareFirst, as the only one offering PPO plans. CareFirst has proposed rate increases for those plans ranging from less than 3 percent to more than 17 percent. Industry analysts characterized those increases as moderate, given an average increase of about 7 percent expected nationwide.

Overall, the number of health plans offered next year on the D.C. exchange will shrink to 162, or about half the number offered when the exchange began two years ago.

Mila Kofman, director of the exchange, said the changes do not signal any trouble with the health of the city’s marketplace. She said the smaller number of plans shows that carriers have become better at figuring out what residents want.

Aetna’s departure would not adversely affect residents, Kofman said, and exchange officials will personally reach out to affected D.C. residents to help them find another provider.

Kofman said that Aetna had failed to gain much market share in the city. “When you have products when there’s not a whole lot of interest to buy, that’s the market telling the carrier what they are selling, people can’t afford. So in terms of competition, it’s not a loss,” she said. “I don’t consider that real competition.”

Aetna will continue to offer plans on the exchange through employers, including Congress. Federal lawmakers and their staff employees make up more than 16,100 of the nearly 19,800 people who buy insurance on the exchange through employers in the District. A slightly larger group — more than 23,000 people — have been insured through individual plans purchased on the marketplace.

Robert Laszewski, a health-care consultant in Virginia, said Aetna’s departure reflects the fact that the District’s small market remains a problem area for insurers who do not cater to the federal workforce.

“The District has never been thought of as an attractive market. It’s not a state — it’s one city, one moderate-sized city, and it’s also known for extreme regulation,” Laszewski said. “When you have a small market that gives a lot of regulatory trouble, for insurers, it’s like, why bother?”

Walt Cherniak, an Aetna spokesman, said the company “reluctantly decided” it would scale down in the District. “It’s about whether it was the right thing for us,” he said.

Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.

New Kids on the Bloc: Phil Mendelson Deals With the Freshmen

New Kids on the Bloc: Phil Mendelson Deals With the Freshmen

Posted by Will Sommer, City Paper, on July 10, 2015 at 7:00 am

Phil Mendelson has a freshmen problem. Facing a breakfast revolt last week from councilmembers opposed to phasing in tax cuts early, the chairman of the D.C. Council lamented the “problem” with so many new councilmembers. That problem, according to Mendelson? They missed the debates that happened before they were on the Council, so they want to litigate them again.

Indeed, the five new councilmembers, two of whom qualify as millennials, have fallen for that most millennial of afflictions: FOMO, or Fear of Missing Out. As Mendelson tried to push for new tax cuts to go into effect this summer, the new councilmembers and others supported Mayor Muriel Bowser’s plan to keep the cuts in February 2016—or at to least wait long enough to talk about them some more.

“Let’s just have the conversation,” said LaRuby May, Ward 8’s freshman councilmember.

Mendelson wasn’t just facing down May and Ward 4 Councilmember Brandon Todd, both of whom were elected by Bowser’s fundraising and campaign apparatus in April. Newbies like Ward 1’s Brianne Nadeau, Ward 6’s Charles Allen, and at-larger Elissa Silverman don’t owe their nascent political careers to Bowser, but they were just as active as the mayor’s councilmembers in opposing Mendelson’s schedule.

In the end, Mendelson agreed to a compromise September trigger offered by Allen and At-Large Councilmember Anita Bonds that just barely succeeded, 7-6.

The newly restless freshmen could challenge the hegemony Mendelson has enjoyed for more than a year. Under lame duck Mayor Vince Gray, Mendelson had no problem calling the shots, with even Gray allies like Ward 7’s Yvette Alexander bailing on the mayor. But now that Bowser’s in the mayoral suite and the freshmen are starting to flex their votes, Mendelson can’t whip the Council together on every issue like he used to.

After the budget vote, Mendelson walked back his “problem” line on new councilmembers. Now, in Mendelson’s telling, acclimating the new councilmembers to issues that have already been debated doesn’t meet the threshold for a “problem.”

“I used the word ‘problem,’ and I sometimes use that word too quickly,” Mendelson says. “Not ‘problem’ in a negative way, it’s more like the word ‘challenge.’”

Still, the newly vocal freshmen—who are denied their own committees, per Mendelson’s rules—delighted frequent Mendelson antagonist and At-Large Councilmember Vincent Orange.

“The fact that we have five new councilmembers, that’s the reality of the day,” he told Mendelson at the contentious breakfast.

Mendelson denies LL’s theory that the vocal freshmen are going to cause trouble for his agenda.

“I don’t see it as a bloc,” Mendelson says.

Mendelson’s right that the freshmen don’t always vote in unison. Later last week, when Bonds tried to gut Ward 3 Councilmember Mary Cheh’s proposal to study a publicly-owned Pepco, the freshmen split. Nadeau, Silverman, and Allen opposed the move, while Todd and May supported it. (Bonds won in the end, 7-6, helped by a vote from Orange, a former Pepco executive.)

Still, last week’s tax cut vote showed that the new freshmen aren’t always willing to follow their chairman’s direction. Mendelson, who says the idea of his power struggle with Bowser has also been overplayed, tried to put a positive spin on it.

“I think it’s a good thing that they’re beginning to find their voice,” Mendelson says.

Photo by Darrow Montgomery

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