Rising health-care costs not a trend: Aetna CEO

Yahoo Finance reports:

“Aetna shares took a hit Tuesday after the health-insurance giant said it expects medical costs to rise to the high end of its forecasts.

However, CEO Mark Bertolini told CNBC that while people may be worried that health-care costs will increase now that the economy is improving and will become an industry trend, he’s not.

“We look at this every month, and we’ve looked at the overall trends in the marketplace and trends are behaving,” Bertolini said in an interview with ” Closing Bell .”

The Affordable Care Act, also known as Obamacare, was an “action-forcing event” that led to hospitals and providers doing things differently and more effectively, he added. Consumers are also paying more out of pocket and are therefore more cautious about how they spend their money.

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“If any kind of health-care inflation returns, it’s going to be related to a slow growth in the economy,” he said. “We have to watch it develop. Given that its moving slowly today, I think we have time to get in front of it should it jump up.”

On Tuesday, the Hartford, Connecticut-based company also reported profits and sales that beat analysts’ expectations. In addition, it raised its forecast for 2014.

Bertolini said medical costs were “hard to predict” because small group and individual policy holders are gearing up for changes in Obamacare, he said. However, he expects Aetna will meet annual guidance.

The CEO has criticized Obamacare in the past , saying it is not an affordable product for many people and doesn’t fix the underlying problems causing high health-care costs.

It will be “a long way” before Obamacare settles down and “more healthier enrollees come into the program,” he said Tuesday.

There will also be some confusion as participants have to re-enroll for the first time.

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“We want it go smoothly and we’re working with the administration and with CMS [Centers for Medicare & Medicaid Services] to make it go smoothly,” he said. “But I think folks are going to be a little confused about how to access the system.”

That said, for the first three-quarters of the year, the on-exchange membership has been profitable because operating costs are lower, he noted. A return on capital, however, will take some time because of health-care costs, he said.

Bertolini anticipates rate increases will be in the mid- to low-teens, “in the middle of the pack.”

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As for Ebola’s impact on health-care costs, he doesn’t see it as a major driver.

“The only way it would be a problem, I think, for our industry here in the United States is if there was massive outbreak in the U.S. and I don’t think that’s going to happen. I think we’re in front of it and we’re working to control it,” Bertolini said.