US Election Was Factor in Coventry Deal: Aetna CEO
The U.S. presidential election was a consideration but not a major factor in Aetna’s decision to buy Coventry Health Care, Aetna CEO Mark Bertolini told CNBC’s “Squawk Box” on Friday.
“Our bet is that if we're going to fix the nation's debt and the deficit we've got to fix Medicare and Medicaid,” the Aetna CEO said. “And the products and services that Coventry offers, and we offer as well, are the kind of services that are going to help us fix that.”
Price and timing were also important, Bertolini said. “With the overhang on the stocks associated with health care reform right now, there is no better time to buy than now,” he said. “After the election, should there be a change in administration, you'll see a pop in the stocks.” (Read More: Investors in Health Care Seem to Bet on Incumbent.)
He added that you want to have the deal closed before 2014, “so you can price the products and make sure you're going into health care reform right. We are running out of time to do anything that big.” (Read More: Aetna to Buy Coventry Health for $5.6 Billion.)
Bertolini also noted that half the increase in health care costs for employers across the country over the past four years has been shifted to employees through “benefit changes, big deductibles, out of pocket maximums and premium sharing.”
“If it runs three more years, they'll pay as much as the employer,” he said.
When people are paying out of pocket, then they are going to shop more for health care, Bertolini said. "We're seeing that happen now on these high deductible plans."
Paying more out of pocket, coupled with a decline in wealth and disposable income over the past few years, has also meant a deceleration in the increase in health care costs. (Read More: Orszag Mocks Ryan Plan as ‘Competition Tooth Fairy’.)
“We've seen utilization fall, last year was the lowest I've seen in my whole career of utilization,” Bertolini said. “Not unit price changes, but utilization of services.”