Aetna 2009 Annual Report Download - page 29

Annual Report – Page 23
could be enacted. We cannot predict whether federal health care reform will be enacted, and if it is, what
provisions it will contain or what effect it will have on our business or results of operations, although it could
have a material adverse effect. If enacted, health care reform would most likely require significant rule
making, and we will continue to work with health care policy makers to ensure Americans have access to
affordable insurance.
At the state level, forty-four states and the District of Columbia will hold a regular legislative session in 2010.
We expect state legislatures to focus on the impact of federal health care reform legislation and state budget
deficits in 2010. Proposals under consideration in U.S. Congress could significantly alter the federal structure
that shapes the state regulation of health insurance. While the federal debate is ongoing and the outcome
uncertain, if federal health care reform legislation is enacted, states may be required to significantly amend
numerous existing statutes and regulations. Independent of federal efforts, we expect many states to consider
legislation to extend coverage to the uninsured through health insurance exchanges, increase the limiting age
for dependent eligibility, restrict health plan rescission of individual coverage, increase mandatory medical
benefit ratios, implement rating reforms and enact an autism benefit mandate. We cannot predict whether
health care reforms will be enacted at the state level, and if it is, what provisions it will contain in any state or
what effect it will have on our business or results of operations.
 On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (“ARRA”) was enacted into
law. Under ARRA, as amended, if an individual is involuntarily terminated from employment (for reasons
other than gross misconduct) before March 1, 2010, the individual may elect COBRA coverage and, for a
period of up to fifteen months, receive a subsidy from his or her employer equal to 65% of the otherwise
applicable COBRA premium charged to the employee. The employer is entitled to apply the amount of
premium assistance it pays as an offset against its payroll taxes. Congress may extend the end date of this
subsidy. During 2009, the availability of this subsidy caused more people to elect COBRA coverage from us
than we assumed, which caused unexpected increases in our medical costs. This subsidy may continue to
cause unexpected increases in our medical costs.
 ARRA also expands and strengthens the privacy and security provisions of the federal Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) and imposes additional limits on the use and disclosure
of Protected Health Information (“PHI”). Among other things, ARRA requires us and other covered entities to
report any unauthorized release of, use of, or access to PHI to any impacted individuals and to the U.S.
Department of Health and Human Services in those instances where the unauthorized activity poses a
significant risk of financial, reputational or other harm to the individuals, and to notify the media in any states
where 500 or more people are impacted by any unauthorized release or use of or access to PHI. Business
associates (e.g., entities that provide services to health plans, such as electronic claims clearinghouses, print
and fulfillment vendors, consultants, and us for the administrative services we provide to our ASC customers)
must also comply with certain HIPAA provisions. In addition, ARRA establishes greater civil and criminal
penalties for covered entities and business associates who fail to comply with HIPAA’ s provisions and
requires the U.S. Department of Health and Human Services to issue regulations implementing its privacy and
security enhancements. We will continue to assess the impact of these regulations on our business as they are
issued.
 In 2008, the U.S. Congress reduced funding for Medicare Advantage plans beginning in 2010 and imposed
new marketing requirements on Medicare Advantage and PDP plans beginning in 2009. The health reform
legislation pending in Congress contemplates both a further reduction for Medicare Advantage plans
beginning in 2011 and the introduction of a competitive bidding approach to service members of Medicare
Advantage plans by 2015.