Aetna 2014 Annual Report Download - page 4
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151 Farmington Avenue, F265
Hartford, CT 06156
Mark T. Bertolini
Chairman and Chief Executive Officer
To our shareholders:
2014 was a highly successful year for Aetna. We experienced strong growth in our core
businesses and continued to benefit from the Coventry acquisition. Our annual operating
revenues of $57.9 billion increased 23 percent from 2013 and set a company record. Our
operating earnings of $2.4 billion also set a company record, and we ended the year serving
more than 23.5 million medical members, an increase of approximately 1.4 million members
from 2013.
One of the keys to our 2014 results was the strength of our Government business, which now
represents over 40 percent of Aetna’s total health premiums. During 2014, premiums in our
Government business grew by over 38 percent, primarily driven by Medicare Advantage
membership growth of almost 18 percent and Medicare Supplement membership growth of
nearly 20 percent, well above industry growth rates. We achieved these results despite one of
the largest Medicare Advantage rate cuts in the program’s history. Our Medicaid business also
had an excellent year and contributed to the growth in Government premiums.
We are pleased with our first year execution in the public exchanges, particularly in light of the
well-publicized challenges with the initial launch. We ended 2014 with nearly 600 thousand on-
exchange members and believe this strong result validates our strategy of focusing on
geographies where we have a competitive cost structure and can provide the greatest value to
potential customers.
In 2014 we made significant investments to support our growth initiatives, primarily in our
Government, Healthagen® and Consumer businesses. Even with this increase in investment
spend, our full-year operating expense ratio improved by 100 basis points from 2013, excluding
the impact of ACA-related fees, reflecting higher operating revenues and continued discipline in
controlling costs.
We also made great strategic strides toward achieving our vision of building a better health
care system. We continued to advance our strategy to improve the consumer experience with
the acquisition of bSwift. This transaction was an important step forward as it accelerates our
efforts to create a more consumer-friendly marketplace. We also continued to advance our
strategy of collaborating with providers. We signed contracts with 28 new ACO partners since
year-end 2013, launched multiple new products backed by ACO contracts, doubled our
membership covered by value based contracts to more than 3 million members, and increased
the medical cost spend that runs through these value based contracts to 28 percent.