Aetna 2008 Annual Report Download - page 40

Annual Report - Page 35
Although we seek, within guidelines we deem appropriate, to match the duration of our assets and liabilities and to
manage our credit exposures, a failure to adequately do so could adversely affect our results of operations and our
financial condition.
Our business success and profitability depend in part on effective information technology systems and on
continuing to develop and implement improvements in technology; we have several significant multiyear
strategic information technology projects in process.
Our businesses depend in large part on our information and other technology systems to adequately price our
products and services, process claims and interact with providers, employer plan sponsors and members in an
efficient and uninterrupted fashion, and we have many different information systems supporting our businesses. Our
business strategy involves providing customers with easy to use products that leverage information to meet the needs
of those customers. Our success therefore is dependent in large part on maintaining the effectiveness of existing
technology systems and on continuing to develop, redesign and enhance technology systems that support our
business processes in a cost and resource efficient manner, including through technology outsourcing within the
context of our existing business partnership relationships, a limited budget of human resources and capital. Certain
of our technology systems (including software) are older, legacy systems that are less efficient and require an
ongoing commitment of significant capital and human resources to maintain. We also need to develop new systems
to meet current and expected standards and keep pace with continuing changes in information processing
technology, evolving industry and regulatory standards and customer demands. We have several significant
multiyear strategic information technology projects in process. System development and other information
technology projects are long-term in nature and may take longer and cost more than we expect to complete and may
not deliver the benefits we project once they are complete. If we do not effectively and efficiently manage and
upgrade our technology portfolio, we could, among other things, have problems determining health care cost
estimates and/or establishing appropriate pricing, meeting the needs of providers, employer plan sponsors and
members, or keeping pace with industry and regulatory standards, and our operating results may be adversely
affected.
We are subject to potential changes in public policy that can adversely affect the markets for our products
and our profitability.
It is not possible to predict with certainty or eliminate the impact of fundamental public policy changes that could
adversely affect us. Examples of these changes include policy changes that would fundamentally change the
dynamics of our industry, such as the federal or one or more state governments assuming a larger role in the health
care industry or fundamentally restructuring or reducing the funding available for Medicare or Medicaid programs.
Legislative and regulatory proposals that would significantly reform the health care system are currently pending in
many states and could be advanced at the federal level by the newly-elected president or Congress in 2009. Our
operating results could be adversely affected by such changes even if we correctly predict their occurrence. For
more information on these matters, refer to Regulatory Environment – Legislative and Regulatory Initiatives
beginning on page 27.
We are subject to funding and other risks with respect to revenue received from our participation in
Medicare and Medicaid programs and subject to retroactive adjustments to certain premiums.
We continue to increase our focus on the non-Commercial part of our Health Care segment as part of our business
diversification efforts. In government-funded health programs such as Medicare and Medicaid, our revenues are
dependent on annual funding from the federal government and/or applicable state governments, and state
governments have the right to cancel their contracts with us on short notice if funds are not available. Funding for
these programs is dependent on many factors outside our control, including general economic conditions at the
federal or applicable state level and general political issues and priorities. Our government customers also determine
the premium levels and other aspects of these programs that affect the number of persons eligible or enrolled in these
programs and our administrative and health care costs under these programs. In the past, determinations of this type
have adversely affected our financial results from and willingness to participate in such programs, and similar
conditions may exist in the future. For example, if a government customer reduces the premium levels or increases
premiums by less than the increase in our costs and we cannot offset the impact of these actions with supplemental
premiums and/or changes in benefit plans, then our business and operating results could be adversely affected. In
addition, premiums for certain federal government employee groups, Medicare members and Medicaid beneficiaries
are subject to retroactive adjustments by the federal and applicable state governments. Any such adjustments could
materially adversely affect our business and operating results.