Aetna 2015 Annual Report Download - page 35

Annual Report- Page 29
• The imposition on us and other health insurers, health plans and other market participants of significant
fees, assessments and taxes, including an annual non-tax deductible industry-wide $11.3 billion HIF in
2016, which will be zero in 2017, $14.3 billion in 2018 and increase annually thereafter, and industry-wide
reinsurance assessments of $5 billion in 2016. We project that our share of the 2016 Health Care Reform
fees, assessments and taxes will be approximately $1 billion, which includes our share of the HIF, which we
project will be approximately $855 million. We may not be able to recover all of these fees, assessments
and taxes in our pricing or otherwise solve for them.
• A non-tax deductible 40% excise tax on employer-sponsored health care benefits above a certain threshold
beginning in 2020.
Health Care Reform also specifies minimum MLRs for our Commercial and Medicare Insured products, specifies
required Commercial benefit designs, limits Commercial individual and small group rating and pricing practices,
encourages additional competition (including potential incentives for new market entrants) and significantly
increases federal and state oversight of health plans, including regulations and processes that could delay or limit
our ability to appropriately increase our health plan premium rates. This in turn could adversely affect our ability to
continue to participate in certain product lines and/or geographies we serve today. The application of Health Care
Reform’s minimum MLR and rating standards to our student health products may have an adverse effect on our
ability to sell these products in the future.
In addition, Health Care Reform ties a portion of Medicare Advantage plans’ reimbursement to the achievement of
favorable CMS quality performance measures (“star ratings”). Since 2015, only Medicare Advantage plans with an
overall star rating of four or more stars (out of five stars) are eligible for a quality bonus in their basic premium
rates. As a result, our Medicare Advantage plans’ operating results in 2016 and going forward will be significantly
affected by their star ratings. For additional information on CMS’s stars program and our related performance, see
“Medicare” beginning on page 34.
For additional discussion of certain risk factors that may cause our actual results to differ from currently anticipated
results in connection with federal and state health care reform, refer to “Forward-Looking Information/Risk
Factors” beginning on page 42.
In 2015, state legislatures focused on state budget deficits and taxes, as well as required changes to small group and
other products (including capping member cost sharing or co-payments or otherwise limiting members’ financial
responsibility for health care or other covered services they utilize), provider network composition requirements,
pharmacy benefit and drug coverage requirements, Health Care Reform, and Public Exchange implementation. At
the state level, 46 U.S. states and the District of Columbia will hold regular legislative sessions in 2016. We expect
additional state level legislation and regulatory activity that impacts our businesses to be enacted in 2016, including
additional Health Care Reform-related and budget-related activity, including Medicaid funding in anticipation of
reduced federal funding for Medicaid expansion members beginning in 2017. In addition, independent of federal
efforts, we expect many states to continue to consider legislation or regulations that affect privately-financed health
insurance arrangements and/or public programs, including imposing requirements on the composition of our
provider networks, requiring changes to health benefit product structure, mandating specific benefit coverages, and
enhancing consumer transparency on cost and quality of care. For example, regulators or legislatures in a number of
states have implemented or are considering limits on premium rate increases, either by enforcing existing legal
requirements more stringently or proposing different regulatory standards or procedures for reviewing proposed
premium rate changes; and imposing taxes on insurers and other health plans to finance Public Exchanges,
Medicaid and other state programs.
We cannot predict what provisions legislation or regulation will contain in any state or what effect legislation or
regulation will have on our business operations or financial results, but the effect could be materially adverse.