Aetna warned DOJ: Sue us, and we scale back on Obamacare Presented by

Some Obamacare backers had argued the nation's third-largest carrier is trying to strong-arm the Obama administration into approving its controversial merger with Humana, and new evidence suggests they might be right.

AETNA WARNED DOJ: SUE US, AND WE SCALE BACK ON OBAMACARE — Aetna has loudly denied that it's exiting Obamacare exchanges because of a Justice Department lawsuit, but last month CEO Mark Bertolini expressly warned the Obama administration that the company would do exactly that.

Bertolini wrote to the DOJ on July 5 that if the administration tried to stop Aetna's controversial merger with Humana, Aetna would be forced to scale back its exchange presence, the Huffington Post's Jonathan Cohn and Jeffrey Young first reported.

"If the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses," Bertolini wrote, more than two weeks before the Justice Department sued to block Aetna's merger with Humana. He argued that Aetna needed the synergies of a successful merger to help cover its mounting operational costs, and that an administration lawsuit would only worsen the company's finances.

... Bertolini also spelled out how Aetna would reverse its previous expansion plans: "In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states."

Aetna on Monday announced that it will sell Obamacare exchange plans in just four states next year, down from 15 states this year.

Bertolini's July letter: http://huff.to/2bFAOhR

HuffPo's story: http://huff.to/2bcYSFO

Sudden reversal. As late as May 12, Aetna CEO Mark Bertolini and spokesmen had said that the insurer would stay on the Obamacare exchanges next year, even as competitors dropped out, before publicly reversing course this week.

Aetna chalks its decision up to mounting Obamacare-related losses and increased visibility into exchange performance — while still denying as of Tuesday night that the administration's lawsuit to block its merger with Humana played a role.

Meanwhile: Observers are getting nervous about exchange participation. HHS on Tuesday tried to reassure observers that there's still sufficient competition in the exchanges and that Aetna's withdrawal reflects the oft-bumpy process of building the markets. But in some states, consumers may have only one or two insurers to choose from in the exchanges next year — and people eligible for Obamacare subsidies can't get that financial assistance if they try to find a health plan outside the exchange, Pro's Paul Demko and Rachana Pradhan write. http://politico.pro/2bgvblh

"I'm very worried," said Greg Scott, head of Deloitte's health plans practice, of the possibility of more insurers fleeing the exchanges, which have attracted older and sicker customers than some insurers had anticipated. Scott acknowledges that some smaller plans "are very much intent on staying in the markets," but the exchanges are burning through money.

WELCOME TO WEDNESDAY PULSE — Where Hillary Clinton is still deciding who will play Donald Trump in her debate prep. One familiar name in the running: Ron Klain, who appeared on the "Pulse Check" podcast in May and was asked this very question by your author. (Klain's response was quick and subtle, which suggests he has work to do if he wants to master a Trump impersonation.) Send tips and possible Trumps to [email protected] or @ddiamond on Twitter.

A message from PhRMA: Today, there are several promising vaccine candidates in stage three clinical trials. These trials have tens of thousands of participants, from every walk of life. From development to robust clinical trials, and throughout manufacturing, these vaccine candidates follow the same rigorous process of other vaccines that have saved millions of lives. More.

EYE ON OBAMACARE

Andy Slavitt on two reasons why exchanges are still an attractive play for insurers. The CMS acting administrator took to Twitter on Tuesday to argue that the long-term upside outpaces the short-term challenges.

"The economics are compelling," Slavitt tweeted, pointing out that exchange customers represent tens of billions of dollars in new opportunities. "With even modest margins/growth, big business," he added.

See Slavitt's comments: http://bit.ly/2aTreqi

One insurer doing well: Florida Blue. Obamacare has been a boon, the insurer's CEO told CNBC on Tuesday.

While Aetna is pulling out from Florida's market, Florida Blue serves 700,000 customers through the state's insurance exchange — and is making money. Modern Healthcare reported that Florida Blue made $471 million in profit on its Obamacare plans last year.

"The big nationals aren't quite as in touch with local markets and it makes a very big difference," CEO Patrick Geraghty said. He added that his company was well-prepared to handle Obamacare's risk pool, which many bigger insurers said turned out to be older and sicker than expected.

"We anticipated that people were going to be more sick because they hadn't had health care in the past," he added, pointing to Florida Blue's efforts like offering immediate risk assessments to new patients.

More: http://cnb.cx/2aZBLik

What Florida Blue's CEO didn't mention: His company's high rates. According to state calculations for the current plan year, Florida Blue's average monthly premiums are $472 — the highest average rates on the exchange. Aetna, meanwhile, is charging $381 in average monthly premiums.

"Blues had highest ave rates [and] Geraghty also wants ACA taxes eliminated," insurance broker Pat Paule tweeted. "Aetna had lower rates [and] now gone. How is this better for consumers?"

ON THE TRAIL

Clinton transition team includes Neera Tanden, Ann O'Leary. The Clinton campaign yesterday announced its transition team, should the Democratic nominee win November's election, and the roster boasts several experts on health and family issues.

Tanden — the head of the Center for American Progress who's serving as one of four transition co-chairs — worked on domestic policy in the Bill Clinton administration and had a senior HHS health reform position in the Obama administration. O'Leary, who is serving as a senior domestic policy adviser to the campaign, was previously a professor of health law and social policy at UC-Berkeley. Members of the transition team often go onto senior administration positions.

PROVIDERS

How to build a better health care workforce. Steven Wartman, the president of the Association of Academic Health Centers, writes in Health Affairs about ways to improve the state of graduate medical education.

Wartman bemoans the stressors on caregivers, like the growing pressure to maximize patient throughput. At the same time, he acknowledges the industry is rapidly changing — and "even if we could make reasonable predictions, simply adding more physicians is not a thoughtful solution," he notes.

Instead, Wartman offers four steps to improve U.S. graduate medical education.

1 — Improve the relationship between academic institutions and the delivery systems that will eventually employ their students.

2 — Redistribute the cost of education, lessening the distorting effects that currently encourage students to pick professions that will make it easier to pay back their loans.

3 — Speed up the time it takes to go through training, through better integration of different components, like pre-med and med school.

4 — Make sure accreditors and licensers are pushing real industry improvements, and aren't just "guardians of the status quo."

Read the post: http://bit.ly/2b2DvWF

AROUND THE NATION

Debbie Wasserman Schultz gets NARAL endorsement. The embattled Florida congresswoman, who last month resigned as head of the Democratic National Committee, got a vote of confidence from NARAL Pro-Choice America PAC on Tuesday. The abortion-rights group said that Wasserman Schultz has been a key ally in protecting access to contraception and abortion.

"Debbie understands that harmful, anti-choice policies like the Hyde and Helms amendments only end up further discriminating against low-income women," NARAL's Sasha Bruce said in a statement.

Cost of one system's nursing strike: $20.4 million. That's how much a seven-day strike in June called by the Minnesota Nurses Association ended up costing Allina Health, Ayla Ellison writes at Becker's Hospital Review. Overall, the Minnesota-based health system saw operating income in the first half of 2016 fall by 40 percent compared to last year, largely because of strike expenses. More: http://bit.ly/2baTB2r

WHAT WE’RE READING by Nancy Cook

The New York Times editorial board says Obamacare will survive Aetna’s retreat — but it does need reforms: http://nyti.ms/2blVGcl

Ed Silverman flags an update in the much-watched California drug pricing ballot initiative, where a judge denied a petition from the measure's supporters: http://bit.ly/2blIGoh

The fine print of health plans sold on Obamacare exchanges may allow them to exclude services that are used by many women (and some men), Michelle Andrews reports: http://n.pr/2aYGq6V

Writing in the New Yorker, Siddhartha Mukherjee chronicles the race for a Zika vaccine: http://bit.ly/2bhtgA9

Almost 300 million people on Earth have serious vision problems or can't see at all. But there's growing hope that we can end blindness, David Dobbs writes in National Geographic's cover story: http://on.natgeo.com/2aXrVQT

Follow us on Twitter Joanne Kenen @joannekenen



Adriel Bettelheim @abettel



Jason Millman @jasonmillman



Lauren Morello @lmorello_dc



Sara Smith @sarasmarley



Dan Diamond @ddiamond



Zach Brennan @ZacharyBrennan



Adam Cancryn @adamcancryn



Tucker Doherty @tucker_doherty



Brianna Ehley @briannaehley



Dan Goldberg @dancgoldberg



David Lim @davidalim



Susannah Luthi @SusannahLuthi



Alice Miranda Ollstein @aliceollstein



Sarah Owermohle @owermohle



Carmen Paun @carmenpaun



Mohana Ravindranath @ravindranize



Rachel Roubein @rachel_roubein



Darius Tahir @dariustahir