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Aetna CEO: Public Insurance Option ‘Wrong Way to Go’

August 18, 2009 at 12:00 AM EDT
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Efforts to overhaul the health care system would be damaged by creating a public option to compete with private insurers, Ron Williams, chief executive of Aetna Inc., the nation's third-largest health insurer, tells Judy Woodruff.
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JUDY WOODRUFF: Last week, we heard from the head of a major hospital whose record for quality and care has been praised. Tonight, we get the views of a leading insurer.

Aetna is the nation’s third-largest health insurer. Its chief executive, Ron Williams, has met with President Obama and with lawmakers from both parties.

Ron Williams, thank you very much for talking with us.

RON WILLIAMS, chief executive officer, Aetna Inc.: Well, thank you for inviting me. It’s a pleasure to be here.

JUDY WOODRUFF: What is the main thing or things that you believe should be changed about the health care system in this country?

RON WILLIAMS: Well, I think one of the things we have to do is we have to find a way to get and keep everyone covered with health insurance. And I think there are very specific things we can do to make the individual insurance market work better for those seeking individual insurance.

I think the second critical thing is we have to slow down the rate of increase in health care services, and I think there are many ideas under discussion to really accomplish those two things.

JUDY WOODRUFF: Well, one of the ideas very much out there — we just heard Kathleen Sebelius reiterate it — the president likes that public insurance option, despite signals to the contrary. You are on record as saying it’s the wrong way to go. Why?

RON WILLIAMS: Well, I think we think it’s the wrong way to go because we believe that the changes that are being proposed in the individual insurance market will, in fact, address many of the fundamental problems that are legitimate and real issues in the health insurance market and the way the industry works.

I think the other point I would make is that, when you have a government plan, you have in essence a player in the industry who is a participant in the market, but also is a regulator and a referee in the game. And we think that those two roles really don’t work well.

JUDY WOODRUFF: Now, President Obama has said that wouldn’t be the case. In fact, he addressed that very comment that you made not very long ago, and he said there would be rules and that there would be a level playing field if the government were part of this.

He went on to say, too, that, what do private insurers have to be afraid of? He said, if they’re doing such a good job, why would the government be a threat in any way?

RON WILLIAMS: Well, I believe that the whole debate about the government plan is really a diversion away from the central critical issue, which is, how do we get and keep everyone covered?

I think we have 45 million people in the country who deserve the same kind of health care that you or I would expect to have. And I think, when we talk about the government plan, we really aren’t focusing on how we make the market work.

I think Aetna has been on record of saying that we should eliminate the use of health status or pre-existing conditions, that we should expect or require that everyone have health insurance. And I just say, “Let’s get the conversation back to what we do about that.”

Maintaining private insurers

Ron Williams
CEO of Aetna Inc.
When you have a government plan, you have in essence a player in the industry who is a participant in the market, but also is a regulator and a referee in the game. And we think that those two roles really don't work well.

JUDY WOODRUFF: So, but if you want to cover everyone, and you don't want the government involved, the private insurance industry has been the major player on the field for decades, and yet you've got 46, what, million Americans with no health insurance. So how do we know that the problem is going to be taken care of, if the private sector is still in charge?

RON WILLIAMS: Well, I think, one, the private sector is -- the insurance industry is one of the most regulated industries in the country. We're regulated by over 50 different insurance commissioners, in addition to the Department of Labor and the Center for Medicare and Medicaid Services. So there is a lot of regulation that really isn't well appreciated.

I think the other thing is, we have to look at who the 45 million uninsured are. There are over 11 million of the 45 million who are eligible for the Medicaid program, and yet we don't find those people, we don't get them enrolled, and where is the angst and outrage and energy to reduce that uninsured by finding those people who are eligible for that program?

JUDY WOODRUFF: You think we're making too much of the number of uninsured?

RON WILLIAMS: Absolutely not. One person uninsured is one person too many. But I think if we segment the population and understand the specific solutions -- for example, there is a real problem with the individual insurance market. I've been on record since 2005 saying we need to find a way to eliminate the use of the pre-existing condition.

The way to do that is really to get everyone in the insurance pool, and that way we'll have people who need health services today, some who need it tomorrow, and some who won't need it for quite some time.

JUDY WOODRUFF: You want to get everybody in the insurance pool, but I'm sure you know there are those out there who say, well, that's not an altruistic wish on the part of the health insurance industry. In fact, we've seen some -- a number of analysts say what this is really all about is more profit for your industry. How do you answer that?

RON WILLIAMS: Well, I think fundamentally what we have to focus on is getting people covered is a good thing. And I believe that we should do it in a way that works for all of America. We think that having additional customers is a good thing for the industry.

And I think that it's a very competitive industry. There are more than 1,300 health plans in the country. And I know, when I sit down with our clients, they're very savvy buyers, particularly the large organizations who really cut a very good deal for themselves.

JUDY WOODRUFF: When President Obama says that under the plan that he'd like to see Americans could take their insurance with them when they change jobs, does that make sense to you? Is that a perfectly logical thing to happen?

RON WILLIAMS: Well, I think that what -- the system is being set up in a way that people will take their insurance eligibility with them. And whether or not they go from a company that has Aetna to a company that has some other, they would maintain the right to have insurance. And I think that is an extremely important improvement in how the system works, to be certain that people don't fall through the cracks and we do have good continuity...

JUDY WOODRUFF: So, in other words, they still would have -- they'd be guaranteed insurance?

RON WILLIAMS: And I believe that that is one of the real benefits, in terms of health reform, where I think there's been a lot of agreement among most parties that providing that level of continuity is something that is within reach.

JUDY WOODRUFF: What about this other idea out there, Mr. Williams, and that is a so-called cooperative, nonprofit cooperative? If you can't get enough agreement on a public insurance plan run by the government, there would be this other thing that would run health insurance coverage? What do you think about that?

RON WILLIAMS: Well, I would rather not comment on something I don't understand, have not seen, don't know much about, but it does sound like a back-door approach to a government health plan. But, again, I would wait to see what the specific proposals were, but it doesn't sound as though it's something that's meaningful.

Earning the public trust

Ron Williams
CEO of Aetna Inc.
There is a real problem with the individual insurance market. I've been on record since 2005 saying we need to find a way to eliminate the use of the pre-existing condition.

JUDY WOODRUFF: Several years ago, after you became CEO of Aetna, according to the Wall Street Journal, Aetna raised premiums as much as 50 percent in some cases, it raised co-payments. Ultimately, I think 8 million of your plan members were dropped out of 21 million, all in order to return Aetna to profitability. If someone looks at that situation, why wouldn't they believe that the private insurance industry could do something like that again?

RON WILLIAMS: Well, I think it's a fair question. And I think, one, I would correct the timing a little bit, that the company was struggling significantly about 2001. And I think during that time the company discovered that it had undercharged its customers for the cost of health care services that were being delivered.

I wish we could have kept every one of those customers. And I think it's a testament to the competitiveness of the private market that our competitors grew quite nicely.

I think also during that time we really weren't delivering on the good fundamentals of customer service as we strive to do today, and I think we do a very good job.

Today we have well over 19 million members. We've grown in the marketplace. We've increased our employees by more than 50 percent. And we've done it really by offering our customers a very competitive value in the marketplace.

But fundamentally, the answer to your question is, we have to control the rate of increase in health care costs. And a lot of the dialogue is about insurance reform, which is one important element, particularly for the individual and small group market, but the other important element is really making certain we focus on slowing down the rate of increase in health care services.

JUDY WOODRUFF: Very quickly, Aetna also spent, by our calculation, according to the Center for Responsive Politics, over $24 million over the last decade to lobby the federal government. Someone looking at that number, why wouldn't they think your company would have disproportionate influence over policy?

RON WILLIAMS: Well, I don't know what percentage 24 percent would represent of all money spent on lobbying. I suspect that there are many other constituents, the AMA, the Hospital Association, pharmacy, oil -- I could go on and on, defense -- who spend money.

I think that we have tried to use our effort to pass legislation we think is good for the country. For example, we worked very collaboratively with Senator Kennedy to pass the mental health parity bill. It's a bill we're proud of being supportive of. I think Senator Kennedy was very complimentary of our role in that.

And we think that's a very good use of our lobbying resources to pass bills that make certain that people are getting access to the health care services that they need.

JUDY WOODRUFF: Ron Williams, CEO of Aetna, thank you very much for talking with us.

RON WILLIAMS: Thank you.