Aetna 2013 Annual Report Download - page 66

Annual Report- Page 60
adversely affected. If we are unable to limit our price increases, we may lose members to competitors with more
favorable pricing, adversely affecting our revenues and operating results.
In response to rising prices, our customers may elect to self-insure or to reduce benefits in order to limit increases in
their benefit costs. Alternatively, our customers may purchase different types of products from us that are less
profitable. Such elections may result in reduced membership in our more profitable Insured products and/or lower
premiums for our Insured products, which may adversely affect our revenues and operating results, although such
elections also may reduce our health care and other benefit costs.
In addition, our Medicare, Medicaid and SCHIP products are subject to termination without cause, periodic re-bid,
rate adjustment and program redesign, as customers seek to contain their benefit costs, particularly in a slow
economy. These actions may adversely affect our membership, revenues and operating results.
If we fail to compete effectively in the geographies and product areas in which we operate, including
maintaining or increasing membership in our Health Care business, our results of operations, financial position
and cash flows could be materially and adversely affected.
Our businesses face significant competition in all of the geographies and product areas in which we operate. In our
Health Care business, we compete on the basis of many factors, including perceived overall quality, quality of
service, comprehensiveness of coverage, cost (including premium, provider discounts and member out-of-pocket
costs), product design, financial stability and ratings, breadth and quality of provider networks, providers available
in such networks, and quality of member support and care management programs. Our competitors in our Health
Care business include, among others, United HealthGroup, Inc., WellPoint, Inc., Humana Inc., Cigna Corporation,
WellCare Health Plans, Inc., Centene Corporation, Health Net, Inc., Kaiser Permanente, and numerous for-profit
and not-for-profit organizations operating under licenses from the Blue Cross and Blue Shield Association.
Additional competitors in our businesses include other types of medical and dental provider organizations, various
specialty service providers (including pharmacy benefit management services providers), integrated health care
delivery organizations, third-party administrators, HIT companies and, for certain plans, programs sponsored by the
federal or state governments. In particular geographies, competitors may have greater capabilities, resources or
membership; a more established reputation; superior supplier or health care professional arrangements; better
business relationships; or other factors that give such competitors a competitive advantage. We have begun to
compete for sales on Insurance Exchanges, where we face additional risks from existing and new competitors
(including our vendors) who have lower cost structures, greater experience marketing to consumers and/or who
target the higher margin portions of our business. Among our international and HIT competitors, many have longer
operating histories, better brand recognition and greater market presence in many of the areas in which we are
seeking to expand and more experience at rapidly innovating products.
If we do not compete effectively in the geographies and product areas in which we operate, if we do not design and
price our products properly and competitively, if we are unable to innovate and deliver products and services that
demonstrate value to our customers, if we do not provide a satisfactory level of service, if membership or demand
for other services does not increase as we expect or declines, if we do not compete successfully on Insurance
Exchanges and/or if we are unable to adapt successfully to a rapidly changing competitive and regulatory
environment, our business, results of operations, financial position and cash flows could be materially and adversely
affected.
For more information on these risks, see:
• “Our strategy may not be an effective response to the changing dynamics in the health and related benefits
industry, or we may not be able to implement our strategy and related strategic projects effectively”,
beginning on page 48;
• “Competitive and economic pressures may limit our ability to increase pricing to reflect higher costs or
may force us to accept lower margins. If customers elect to self-insure, reduce benefits or adversely
renegotiate or amend their agreements with us, our revenues and operating results will be negatively
affected”, beginning on page 59;