Aetna 2013 Annual Report Download - page 67

Annual Report- Page 61
• “In order to be competitive in the growing marketplace for direct-to-consumer sales and on public and
private health insurance exchanges, we will need to make investments in consumer engagement, reduce our
cost structure and face new competitors. If we are unsuccessful, our future growth and profitability may be
adversely impacted”, beginning on page 67;
• “If we fail to develop new products, differentiate our products from those of our competitors or demonstrate
the value of our products to our customers, our ability to retain or grow profitable membership may be
adversely affected”, beginning on page 68;
• “Our competitive position and ability to differentiate our products will be adversely affected if we cannot
demonstrate that our products and processes result in our members receiving quality care”, beginning on
page 69;
• “Continuing consolidation and integration among providers and other suppliers may increase our medical
and other covered benefits costs, make it difficult for us to compete in certain geographies and create new
competitors”, beginning on page 69; and
• “We may not be able to compete effectively in the HIT business and earn a profit. Our HIT business
increases our risk of patent infringement and other intellectual property litigation and may become subject
to significant regulation in the future”, beginning on page 73.
A number of factors, many of which are beyond our control, contribute to rising health care and other benefit
costs. If we are unable to satisfactorily manage our health care and other benefit costs, our operating results and
competitiveness will be adversely affected.
A number of factors contribute to rising health care and other benefit costs, including the aging of the population
and other changing demographic characteristics, advances in medical technology, increases in the cost of
prescription drugs (including specialty pharmacy drugs), direct-to-consumer marketing by pharmaceutical
companies, inflation and government-imposed limitations on Medicare and Medicaid reimbursements to health
plans and providers, which have caused the private sector to bear a greater share of increasing health care and other
benefits costs over time. Other factors that affect our health care and other benefit costs include changes as a result
of Health Care Reform and other changes in the regulatory environment, implementation of ICD-10, changes in
health care practices, general economic conditions (such as employment levels), new technologies, clusters of high-
cost cases, health care provider and member fraud, and numerous other factors that are or may be beyond our
control.
Our operating results and competitiveness depend in large part on our ability to appropriately manage future health
care and other benefit costs through underwriting criteria, product design, negotiation of favorable provider
contracts and medical management programs. The factors described above may adversely affect our ability to
predict and manage health care and other benefit costs, which can adversely affect our competitiveness and
operating results.
Our government customers may reduce funding for health care programs, cancel or decline to renew contracts
with us, or may make changes that affect the number of persons eligible for certain programs, the services
provided to enrollees in such programs, our premiums and our administrative and health care and other benefit
costs.
Our revenues from government-funded health programs, including our Medicare, Medicaid and dual eligible
businesses and our government customers in our Commercial business, are dependent on annual funding by the
federal government and/or applicable state or local governments. Federal, state and local governments have the
right not to renew or cancel their contracts with us on short notice without cause or if funds are not available.
Funding for these programs is dependent on many factors outside our control, including general economic
conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or
applicable state or local level and general political issues and priorities.
For example, while Health Care Reform will significantly expand the number of people who will qualify to enroll
in Medicaid beginning in 2014, most states currently face significant budget challenges, several states are currently
seeking to reduce their Medicaid expenditures and other states may take similar action. Our government customers