AETNA CEO, Ronald Williams on the Baucus Plan
Thursday, September 24, 2009SUZANNE PRATT: The Senate Finance Committee today continued debate over Chairman Max Baucus' proposal to overhaul healthcare. The committee has made slow progress on hundreds of amendments to the measure, the last of five health care bills pending in Congress. Earlier, I spoke with Ron Williams, chief executive of Aetna, about reform of the nation's health care system. I began by asking him for his assessment of the Baucus plan.
RONALD WILLIAMS, CHAIRMAN & CEO, AETNA: Well, I think it's a very important start in the Senate Finance Committee and I think it's extremely important that we get something done that represents a centrist, bipartisan solution to health care. It's a comprehensive bill and it's changing every day, but based on what (INAUDIBLE) understand, I think it provides a very solid foundation for important progress.
PRATT: And in an op ed that you wrote about a year ago that appeared in the "FT," you said or you warned against trying for the big fix with health care reform. Do you think that the president is currently being too ambitious?
WILLIAMS: Well, I think I would say based on the president's recent comments that one of the things he's incorporated that I think is important is really an expectation that there be an individual coverage requirement, that we expect that everyone would have insurance. Those who could afford it would buy it and those who couldn't afford it would receive subsidies. And I think one of the big debates that going on now in Senate Finance is what does that mean and what level of subsidy is both appropriate as well as what is affordable.
PRATT: Beyond universal reform, what else do you want to see? What would you like to see in terms of health care reform?
WILLIAMS: Well, I think there are two critical elements. One is making certain everyone gets access. And I think we have some very solid proposals on that. I think the other one is really making certain that we reform the health care delivery system because while everyone is aware of the health insurance premium and what health insurance costs, what most people don't connect is the reason that health care premiums go up is because health care costs goes up and the premiums are reflective of that. So bringing more people into the system without really tackling how we get the system to create more value and slow down the rate of increase won't really give us all the reform that we need.
PRATT: Is there anything in particular that would be completely unacceptable to you?
WILLIAMS: Well, I think the thing that we've been very concerned about is this notion of the government plan. And it's really something that we think expands the role of government in a way that government is both a player in the health insurance business as well as a rule maker and a referee. And we think that there are other ways to solve the problem. We think it's diversionary and that we should get back to focusing on how we get and keep everyone covered and how do we really focus on the cost of health care itself.
PRATT: Americans are understandably worried that reform equals higher premiums and/or higher taxes for them. How do we pay for reform if those two things don't happen then?
WILLIAMS: Well, I think when we look at the Senate Finance Committee proposals, one of the things that does reflect that concern is the fact that there would be a variety of taxes on health insurers. We in turn have no alternative but to pass those taxes on to our customers. And we just encourage the Senate Finance and others to look for broad-based ways so that the financing of the health care system is really a broad-based responsibility for the whole country.
PRATT: Uh-huh. I want to begin this next question by saying that I'm not an Aetna customer, but I do want to say or I do want to share that my family's premiums have gone up more than 50 percent in the last two years. Do you think with health care reform my premiums are likely to go up or down?
WILLIAMS: I think your premiums will go up or down in correlation to health care cost itself. And most health insurers really look at the underlying rate of increase in technology, hospitals, physicians, pharmaceuticals and collect that cost, manage it as best they can and then pass that cost on to the consumer in the form of the premium. So I think the real question will be what happens with the health care delivery system?
PRATT: What about Aetna's profitability as a result of reform? What do you expect that health care reform will mean to Aetna's bottom line?
WILLIAMS: Well, I think the answer is we really don't know. I think there are many people who believe that the health industry will get lots of new customers. It's not clear whether those customers would be profitable customers or customers where we would actually take a loss on those customers. So I think what we are doing now is really focusing on taking care of the 19 million customers we have in our medical business and the 36 million Americans who have a relationship with us and really focus on doing a good job for them each and every day.
PRATT: OK. Let's leave it there. Thank you so much for joining us today.
WILLIAMS: Thank you.
PRATT: My guest Ron Williams, chairman & CEO of Aetna.
