Aetna 2013 Annual Report Download - page 56

Annual Report- Page 50
Accordingly, many of the specifics of Health Care Reform will not be known for several years, and given the
inherent difficulty of foreseeing how individuals and businesses will respond to the choices afforded to them by
Health Care Reform, we cannot predict the full effect of Health Care Reform on us or the impact of future changes.
Further, even if we correctly predict how parts of Health Care Reform will develop and affect us, our business and
operating results may still be materially and adversely affected. For example, we anticipate that some aspects of
Health Care Reform and other existing measures and new measures, if enacted, could materially adversely affect
our health care operations and/or operating results by, among other things:
• Reducing our ability to obtain adequate premium rates for the risk we assume (including denial of or delays
in obtaining regulatory approval for and implementation of those rates);
• Restricting our ability to price for the risk we assume and/or reflect reasonable costs or profits in our
pricing, and/or limiting the level of margin we can earn, including by mandating minimum medical loss
ratios and/or requiring us to price prospectively to minimum medical loss ratios;
• Reducing our ability to manage health care or other benefit costs;
• Increasing health care or other benefit costs and operating expenses (including duplicate expenses resulting
from changes in regulations during implementation);
• Increasing our exposure to lawsuits and other adverse legal proceedings;
• Regulating levels and permitted lines of business;
• Imposing new or increasing existing taxes and financial assessments;
• Changing the tax treatment of health or related benefits; and/or
• Regulating business practices (including by requiring us to include specified high-cost providers in our
networks).
We are subject to potential changes in public policy (in respect of Health Care Reform or otherwise) that can
adversely affect the markets for our products and services and our business, operations and financial results.
The political environment in which we operate remains uncertain. It is reasonably possible that our business
operations and financial results could be materially adversely affected by public policy changes at the state or
federal level, which include Health Care Reform but also extend to many other public policy initiatives. Such
changes may present us with new financial and other challenges and may, for example, cause membership in our
health plans to decrease or make doing business in particular states less attractive. If we fail to adequately respond
to such changes, including by implementing effective operational and strategic initiatives, or do not do so as
effectively as our competitors, our business, operations and financial results may be materially adversely affected.
In addition to Health Care Reform, we expect the federal and state governments to continue to enact and seriously
consider many broad-based legislative and regulatory proposals that will or could materially impact various aspects
of the health care system and our business, including additional health care reforms. The federal and many state
governments are also considering changes in the interpretation, enforcement and/or application of existing laws and
regulations. At the state level, over three quarters of U.S. states and the District of Columbia will hold regular
legislative sessions in 2014. In 2013, state legislatures focused on the impact of Health Care Reform and state
budget deficits as well as Public Exchange design and implementation, and premium rate review laws were
expanded in a number of states. We expect state legislatures to focus on these issues again in 2014.
We cannot predict the enactment or content of new legislation and regulations, or the effect they will have on our
business operations or financial results, which could be materially adverse. Even if we could predict such matters, it
is not possible to eliminate the adverse impact of public policy changes that would fundamentally change the
dynamics of our industry. Examples of such change include: the federal or one or more state governments assuming
a larger role in the health and related benefits industry or managed care operations, fundamentally restructuring or
reducing the funding available for Medicare, Medicaid, or dual eligible programs, changing the tax treatment of
health or related benefits, or a significant alteration of Health Care Reform. The likelihood of adverse changes is
increasing due to state and federal budgetary pressures, and our business and operating results could be materially
and adversely affected by such changes, even if we correctly predict their occurrence. For more information on
these matters, refer to “Regulatory Environment” beginning on page 29.