Aetna 2011 Annual Report Download - page 32

Annual Report- Page 26
• Impose retroactive adjustments to premiums and refunds to members;
• Monitor our solvency and reserve adequacy;
• Regulate our investment activities on the basis of quality, diversification and other quantitative criteria; and/
or
• Beginning in 2014, our plans may be excluded from participating in Insurance Exchanges if they are
deemed to have a history of "unreasonable" rate increases.
Our operations, current and past business practices, current and past contracts, and accounts and other books and
records are subject to routine, regular and special investigations, audits, examinations and reviews by these agencies
as well as state attorneys general and offices of inspector general, the Office of the Inspector General (the “OIG”),
the Office of Personnel Management (the “OPM”), the U.S. Department of Health and Human Services ("HHS")
and other state and federal government authorities. In addition, from time to time we receive, and expect to
continue to receive, subpoenas and other requests for information from CMS, HHS, various state insurance and
health care regulatory authorities, state attorneys general and offices of inspector general, the CCIIO, the OIG, the
OPM, committees, subcommittees and members of the U.S. Congress, the U.S. Department of Justice, the Federal
Trade Commission, U.S. attorneys and other state and federal governmental authorities regarding, among other
things, certain of our business practices. These government actions may, among other things, prevent or delay us
from implementing planned premium rate increases and may result, and have resulted, in restrictions on our
business, changes to or clarifications of our business practices, retroactive adjustments to premiums, refunds to
members, payments under policies prior to those payments being due under the terms of the policy, assessments of
damages, civil or criminal fines or penalties, or other sanctions, including the possible loss of licensure or
suspension or exclusion from participation in government programs.
The political environment is uncertain. The federal and state governments continue to enact and seriously consider
many broad-based legislative and regulatory proposals that have impacted or could materially impact various
aspects of the health care system, including pending efforts in the U.S. Congress to repeal, amend or restrict funding
for various aspects of Health Care Reform and pending litigation challenging the constitutionality of Health Care
Reform.
Health Care Reform, enacted in March 2010, makes broad-based changes to the U.S. health care system which
could significantly affect the U.S. economy and has and will significantly impact our business operations and
financial results, including our pricing and medical benefit ratios. Health Care Reform presents us with new
business opportunities, but also with new financial and other challenges. It is reasonably possible that Health Care
Reform, in the aggregate, could have a material adverse effect on our business operations and financial results.
Components of the legislation will be phased in over the next six years. We are dedicating and will continue to be
required to dedicate material resources and incur material expenses during that time to implement and comply with
Health Care Reform as well as state level health care reform. While the federal government has issued a number of
regulations implementing Health Care Reform, many significant parts of the legislation, including health insurance
exchanges (“Insurance Exchanges”), premium rate review, the scope of "essential health benefits", employer
penalties and the implementation of minimum medical loss ratios (“MLRs”), require further guidance and
clarification at the federal level and/or in the form of regulations and actions by state legislatures to implement the
law. As a result, many of the impacts of Health Care Reform will not be known for several years. The U.S.
Supreme Court has agreed to review the constitutionality of several aspects of Health Care Reform and is expected
to issue its decision in mid-2012. Other litigation regarding the constitutionality of Health Care Reform also is
pending. Pending efforts in the U.S. Congress to repeal, amend or restrict funding for various aspects of Health
Care Reform, the pending litigation challenging the constitutionality of Health Care Reform and the 2012
presidential election create additional uncertainty about the ultimate impact of the legislation. For example, we
could be materially and adversely affected by the elimination of Health Care Reform's obligation to purchase health
care coverage (the “individual mandate”) unless our obligation to offer health insurance coverage to each person
who wants to purchase it ("guaranteed issue") also is eliminated. We cannot predict whether pending or future
federal or state legislation or court proceedings will change various aspects of Health Care Reform or the impact
those changes will have on our business operations or financial results, but the effect could be materially adverse.