In Defense of Aetna CEO Mark Bertolini

by Dan Munro, author of Casino Healthcare


Full disclosure: I’ve never met Aetna’s CEO Mark Bertolini, but I did transcribe his keynote speech for a piece on Forbes in 2014. In fact, the general theme of Mark’s keynote that year was the“Creative Destruction of Healthcare.” I have no idea if Mark’s seen the Forbes piece — but I’d like to think he has. There were — and are — some great thoughts in that speech which is now over 2 years old.

Mark needs no defense, of course, but I write this in the spirit of a great quote I keep at the forefront of my thinking — often when I write. It’s a Martin Luther King, Jr. quote that’s always been a personal favorite:

The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.


In the course of our passionate, heated and yes, sometimes hateful healthcare debate, I believe this is one of those times. Mark’s letter has sparked a renewed interest in the future of both Obamacare — and healthcare reform more broadly. As I often reference from a slide I collected in my travels, our healthcare system isn’t broken — it was designed to work this way.




Aetna’s sizable withdrawal from Obamacare exchanges, and Mark’s letter to the Department of Justice are painful reminders that our flawed system is really the product of conscious design — and choice — and the legislation known as Obamacare has not changed that core design. Obamacare may have seemed like a cure, some truly believed it was, but it’s really just a single step out of our healthcare wilderness. It’s the same wilderness we’ve been wandering around in for decades. At different times we’re angry, lost, confused, frustrated, hurt — it’s really more of a nightmare than a wilderness.

But there is hard truth in this wilderness and one of those is that in our Casino Healthcare, all the players are complicit. Payers, providers, pharma, politicians and suppliers are all aligned to a primary objective. Those objectives are unique to them individually, but they’re the same objective collectively. It’s the for-profit business of revenue, stock price, shareholders and campaign contributions. Safety, quality and equality in our system are secondary objectives — even though there are many that push hard on them for the full attention they deserve — myself included.

As it has for decades, Aetna is simply doing what for-profit companies are legally required and expected to do — that is to work in the best interest of their existing customers and shareholders and to maximize their return on invested capital. Like him or not, Mark is doing exactly what he is paid (well) to do.

The larger challenge is that we need an entirely different system design. The challenge here is that any new design requires a change to core, systemic flaws. The first big flaw is the epic, decades’ long battle we’ve had — and continue to have — with the actuarial math around health insurance. We will always lose this battle. The math will always win — and we wind up looking foolish at every skirmish.

Aetna’s withdrawal from the Obamacare exchanges and Mark’s letter to the Department of Justice represents just one of these skirmishes. There have been many others — and there will be many more. It’s important to read the letter Mark wrote to the Department of Justice in its entirety and the link to that is here — but here’s the section where Mark explains Aetna’s logic — flawlessly.

“Although we remain supportive of the Administration’s efforts to expand coverage, we must also face market realities. Our customers expect us to keep their insurance products affordable and continually improving, and our shareholders expect that we will generate a market return on invested capital for them. We have been operating on the public exchanges since the beginning of 2014 at a substantial loss. And although we have been working to improve our operations over the last 2 ½ years, we are challenged to get to break even this year and it will be some time before we recoup our investment (including a return on invested capital in the exchange business). As we add new territories, given the additional startup costs of each new territory, we will incur additional losses. Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition.”

While others may disagree, I believe this is the crux of this particular skirmish — and also of the much broader healthcare reform debate. This is a really big, core component to our Rubik’s Cube wrapped in a Gordian Knot. The broader debate was also summarized by noted health policy expert Harold Pollack with his headline.

Aetna or no Aetna, the exchanges need help

His key quote is this one sentence:

“If marketplaces were profitable, Aetna would not have done this, and we wouldn’t have cared if they did.”

That is the whole point. While you may disagree with the timing of Mark’s letter — or Aetna’s withdrawal — I think both are simply reflective of a system that isn’t broken — it’s just working as it was designed. Vilifying Mark is easy and may even be popular — but it’s misdirected because he is not to blame for the system design and it solves nothing. The equation was altered — and there’s no reversal on the horizon. Aetna won’t magically change their mind — and they are now on a trajectory to incur significant legal costs in defense of their proposed merger with Humana against a very large adversary — the Federal Government.

The Government may win the argument — it often does — but it doesn’t change the math. The math always wins. We may not like the math. We may want the math to return a different result, but it can’t — and never will. If you want to change the math — you have to change the equation. This was also a key them in Mark’s keynote two years ago.

In every way, the roots to Aetna’s withdrawal and Mark’s letter are simply reflective of a changed equation. In both cases, Aetna’s withdrawal and the merger with Humana — there are variables that the government control — and they both hit Aetna’s equation around cost. In the case of the withdrawal — it’s healthcare costs that exceeded premium revenues — for a sustained period of time. It’s an unprofitable line of business and you can’t just arbitrarily shift those costs to other categories. In the case of the merger with Humana — it’s the enormous legal cost of litigating against the Government pursuing a case of antitrust violations. Mark’s not saying don’t pursue that litigation. He’s just saying there’s a sizable Aetna cost to it.

In fact, the first change to the equation by the Government was last year — and it goes straight into the risk profiling that all insurance companies were forced to do around people over which they had no data. It was the Risk Corridor program.

So who changed the equation — who eliminated the Risk Corridor that, in turn, changed the risk profile of plans sold on the public exchanges? Not Aetna — but Marco Rubio.

Marco Rubio Quietly Undermines Affordable Care Act — New York Times (December 9, 2015)

When you change a variable in an equation — especially a key variable — you have to be prepared for the mathematical consequence — and what we’re seeing today are those consequences. It’s not blackmail — and it’s not hypocritical. Aetna has (historically) supported the ACA — faithfully. What they cannot do — what no one can do — is continue that support when the equation used to calculate risk and price health insurance products is changed by the Government in a significant way. This change, by the way, was also a key variable in the demise of the Co-Ops.

In the end — I believe it’s criminal to use healthcare as a weapon to argue a fiscal or political ideology — but that is what others seem perfectly comfortable doing. Marco Rubio is one of those people who knew full well what he was doing when he helped to end the risk corridors — which were specifically designed to help bridge an unknown risk into a known, quantifiable one. He (and others) are determined to derail Obamacare. Blaming Aetna — or Mark Bertolini for this is naïve and totally misplaced.

“If you don’t know history, then you don’t know anything. You are a leaf that doesn’t know it is part of a tree.” Michael Crichton

Mark needs no defense, of course, but I applaud his courage to stand up to the enormous challenge of fundamentally changing our healthcare system — at great personal sacrifice. Sure, he’s well paid, but here’s the thing — like many who are well paid and wealthy, he doesn’t need this fight. If he left Aetna tomorrow, his life wouldn’t change — other than he would likely have more family time and fun. He chooses this fight. He even labeled it in his 2014 keynote address at HIMSS — it’s the “Creative Destruction of Healthcare.”


The first step in changing any thinking is to recognize that there’s a problem. The second step is the very first slide that Mark used at his 2014 keynote. “We cannot solve our problems with the same thinking we used when we created them” – Albert Einstein.

Mark’s letter and Aetna’s withdrawal (not to mention Harold Pollack’s quote) serve well to remind us that we still have a huge healthcare problem. We did not solve it . It never went away — and like the famous line in our countries first “blockbuster” movie — “we’re gonna need a bigger boat.” We don’t just a need a bigger one — we need a whole new design.

About the author:  Dan Munro is one of the leading writers on healthcare topics including technology, innovation, and policy.  He is a frequent contributor to numerous publications including Forbes.


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