Hacker News Reader

Comment by tptacek | Hacker News Reader

Note 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.

View on HN

"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.

Even 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?

I 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.

This 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.

> 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...

Though, again, it clearly says in the article it's not and they pulled out of states where they were profitable.

It 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.

But it wasn't true that they were losing money in all the markets they pulled out of.

Reply on news.ycombinator.com