Aetna 2013 Annual Report Download - page 54

Annual Report- Page 48
• “Our ability to anticipate medical cost trends and achieve appropriate pricing on Public Exchanges could
adversely affect our operating results. There can be no assurance that the future health care benefit costs of
our Public Exchange products will not exceed our projections”, beginning on page 62;
• “Recent legislative changes and Medicare Advantage and PDP rates for 2014 and proposed rates for 2015
create significant challenges to our Medicare Advantage and PDP revenues and operating results, and
proposed changes to these programs could create significant additional challenges. Entitlement program
reform, if it occurs, could have a material adverse effect on our business, operations or operating results”,
beginning on page 51;
• “We may fail to successfully combine the business and operations of Aetna and Coventry to realize the
anticipated benefits and cost savings within the anticipated timeframe or at all”, beginning on page 71; and
• “Programs funded by the United States federal government account for a substantial portion of our revenue
and operating earnings. A delay by Congress in raising the federal government’s debt ceiling could lead to
a delay, reduction, suspension or cancellation of federal government spending and a significant increase in
interest rates that could, in turn, have a material adverse effect on our businesses, operating results and
cash flows”, beginning on page 58.
While we consider the foregoing to be the overarching risks we face in 2014, they are not the only material risks we
face. We face numerous other challenges, as described elsewhere in this Annual Report, including below in this
“Forward-Looking Information and Risk Factors” discussion, and other unanticipated risks may develop.
Our strategy may not be an effective response to the changing dynamics in the health and related benefits
industry, or we may not be able to implement our strategy and related strategic projects effectively.
Our strategy includes effectively investing our capital and human resources in appropriate strategic projects, current
operations and acquisitions to respond to changing dynamics in the health and related benefits industry, including
the shift toward the direct-to-consumer marketing model contemplated by Public Exchanges and Private Exchanges
(collectively, “Insurance Exchanges”), the declining number of commercially insured people and the potential shift
to a defined contribution model for health benefits. Our strategic projects include, among other things, integrating
the Coventry business, transforming our business model through consumer engagement, ACOs and collaborative
provider networks, optimizing our business platforms, managing certain significant technology projects, further
improving relations with health care providers, negotiating contract changes with customers and providers,
implementing other business process improvements and participating in Insurance Exchanges. Implementing our
strategic initiatives will require significant investments of capital and human resources. Among other things, we
will need to simultaneously acquire and develop new personnel, products and systems to serve existing and new
markets and enhance our existing information technology, control and compliance processes and systems. The
future performance of our businesses will depend in large part on our ability to design and implement our strategic
initiatives, some of which will occur over several years. If these initiatives do not achieve their objectives, our
operating results could be adversely affected.
Our strategy may not be an effective response to the changing dynamics in the health and related benefits industry,
and we may fail to recognize and position ourselves to capitalize upon market opportunities. We may not have
sufficient advance notice and resources to develop and effectively implement an alternative strategy. Competitors
who develop a superior strategy, or more effectively implement their strategy, may develop capabilities, competitive
advantages and competitive positions that are difficult to match or overcome.
Health Care Reform and Other Legal and Regulatory Risks
If we are unable to include the significant assessments, fees and taxes imposed on us by Health Care Reform in
our premiums and fees or otherwise solve for them, our operating results, financial position and/or cash flows
would be materially and adversely affected. The inclusion of these assessments, fees and taxes in our premiums
also could adversely affect our ability to grow and/or maintain our medical membership.
Health Care Reform imposes significant assessments, fees and taxes on us and other health insurers, health plans
and other industry participants. Health Care Reform imposes an annual industry-wide $8 billion health insurer fee