Aetna Increases Lobbying Spend – Analyst Blog

In an effort to reshape legislation in its favor, health insurer Aetna Inc. (AET) spent $1.6 million in advocacy costs in the first quarter 2010.

 

Hartford-based Aetna’s lobbying costs more than doubled from the prior year quarter spending of $802,573. Aetna was apprehensive of some of the provisions relating to the health care overhaul, such as prohibiting denial of coverage/claims based on pre-existing conditions, subsidizing insurance premiums, compliance with minimum loss ratio, reduced government spending on Medicare Advantage program, etc.

 

Aetna also lobbied on other issues such as providing incentives for businesses to provide health care benefits, Medicaid drug rebates, the promotion of generic drugs in Medicare and medical malpractice liability reform. 

 

Aetna lobbied on these issues, which would lead to higher overhead costs, a larger pool of members who possess pre-existing conditions and poor health, and regulatory pressure on premium increases that will directly affect its bottom line, pressurizing margins.

 

Aetna will likely suffer from a cutback in government spending on the Medicare Advantage Plan from which it drew 20% of its premium during 2009. However, the Health Care reform bill will bring in about 32 million people under the insurance bracket. The inclusion of more people would culminate in increased potential for Aetna. Moreover, since most of the provisions of the bill will not be implemented until 2014, no dramatic changes will be faced by the company right away.

 

Aetna’s rival UnitedHealth Group (UNH) spent $660,000 on lobbying during the same period, down 56% from the prior-year quarter. Cigna Corp. (CI) spent approximately $400,000, WellPoint Inc. (WLP) spent $1.4 million, while Humana Inc. (HUM) spent $248,000.