Aetna 4Q15 Earnings Call Notes

Aetna (AET) Mark T. Bertolini on Q4 2015 Results

Believe we remain on track to close Humana acquisition in 2H16

“Beginning with the Humana acquisition, we continue to work diligently with the Department of Justice and with state regulators toward final approval of the transaction and continue to advance our integration readiness plans. We have obtained seven of the necessary state approvals required to close the transaction and we believe we remain on track to close in the second half of 2016.”

We have serious concerns about the sustainability of public exchanges

“despite our improved finish, this business remained unprofitable in 2015, and we continue to have serious concerns about the sustainability of the public exchanges. Specifically, we remain concerned about the overall stability of the risk pool, including enforcement of standards related to special election period enrollment, where CMS has made some recent changes, but more needs to be done. The lack of predictability and full transparency of the risk adjustment program, which is key to long-term program health, especially as the other two premium stabilization programs expire in 2017; and newly-proposed CMS regulations on network adequacy and standardization of benefits that would limit our ability to offer affordable, innovative on-exchange products. We continue to work constructively with CMS and lawmakers to set this program on a more sustainable path and achieve the underlying goal of making healthcare more affordable and accessible.”

Small group market remains rational

“the market remains rational from a pricing standpoint. We don’t see any unusual behavior, more so this year than in other years. So we see this as a rational environment.”

Seeing a slowdown in private exchanges as a employers didn’t see rate stability

“Well, I think first on private exchanges, we’re seeing the slowdown we anticipated as a result of employers who have tried it, but didn’t see the rate stability that they want to see and have pulled back, particularly on the fully insured segments and moved back to ASO. And so, that’s a sign that there need to be better proof points.”

Shawn M. Guertin – EVP, Chief Financial & Enterprise Risk Officer

Not seen any disruption from move to ICD 10

“Well, it’s certainly an issue that we have watched carefully during the quarter. We have not really seen any meaningful disruption as a result of ICD-10, and I suppose that is one of the silver linings of having a long time to get ready for this as a broader industry. But it is something that we are definitely paying attention to carefully throughout the quarter and frankly even into the beginning of this year as wel”