Aetna 2006 Annual Report Download - page 34

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• Enabling the creation of new types of health plans or health carriers, which in some instances would not be
subject to the regulations or restrictions that govern our operations.
• Allowing individuals and small groups to collectively purchase health care coverage without any other
affiliations.
• Imposing requirements and restrictions on operations of pharmacy benefit managers, including restricting or
eliminating the use of formularies for prescription drugs.
• Making health plans responsible for provider payments in the event of financial failure by a capitated physician
group or other intermediary.
• Creating or expanding state-sponsored health benefit purchasing pools, in which we may be required to
participate.
• Creating a single payer system where the government oversees or manages the provision of health care
coverage.
• Imposing employer or individual health coverage mandates.
It is uncertain whether we can counter the potential adverse effects of such potential legislation or regulation,
including whether we can recoup, through higher premiums or other measures, the increased costs of mandated
benefits, assessments or other increased costs.
We also may be adversely impacted by court and regulatory decisions that expand the interpretations of existing
statutes and regulations or impose medical malpractice or bad faith liability. Among other issues, federal and state
courts continue to consider cases addressing the pre-emptive effect of ERISA on state laws. In general, limitations
to this pre-emption have the effect of increasing our costs, liability exposures, or both. Legislative initiatives
discussed above include proposals in the U.S. Congress to restrict the pre-emptive effect of ERISA and state
legislative activity in several states that, should it result in enacted legislation that is not preempted by ERISA,
could increase our liability exposure and could result in greater state regulation of our operations.
Patients’ Rights Legislation
Various state legislatures and the U.S. Congress continue to debate legislation containing various patient protection
initiatives, including provisions that could expose us to unlimited economic damages and certain punitive damages,
for making a determination denying benefits or for delaying members’ receipt of benefits as a result of “medical
necessity” and other coverage determinations. We cannot predict whether these measures will be enacted into law
in 2007 or what form any such legislation might take.
ERISA
The provision of services to certain employee benefit plans, including certain Health Care, Group Insurance and
Large Case Pensions benefit plans, is subject to ERISA, a complex set of laws and regulations subject to
interpretation and enforcement by the Internal Revenue Service and the Department of Labor (the “DOL”). ERISA
regulates certain aspects of the relationships between us and employers who maintain employee benefit plans
subject to ERISA. Some of our administrative services and other activities may also be subject to regulation under
ERISA. In addition, some states require licensure or registration of companies providing third-party claims
administration services for benefit plans.
DOL regulations under ERISA set standards for claim payment and member appeals along with associated notice
and disclosure requirements. We have invested significant resources to comply with these standards, which
represent an additional regulatory burden for us.
Certain Large Case Pensions and Group Insurance products and services are also subject to potential issues raised
by certain judicial interpretations relating to ERISA. Under those interpretations, together with DOL regulations,
we may have ERISA fiduciary duties with respect to certain general account assets held under contracts that are not
guaranteed benefit policies. As a result, certain transactions related to those assets are subject to conflict of interest
and other restrictions, and we must provide certain disclosures to policyholders annually. We must comply with
these restrictions or face substantial penalties.