Aetna Trims Lobbying Costs in 2Q - Analyst Blog
August 25 2011 - 8:30AM
Zacks
In an effort to reshape legislation in its favor, Hartford-based
health insurer Aetna Inc. (AET)
lobbied the federal government on health care reform and spent
$902,452 in advocacy costs during the second quarter of 2011.
Aetna’s lobbying expenses in the reported quarter was down 42%
year over year and 17% sequentially.
Aetna has been lobbying hard since the passage of the Health
Care Reform. The company was apprehensive of certain provisions
related 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.
During the quarter, Aetna lobbied against the minimum
medical-loss ratio imposed by the bill, which requires health
insurance companies to spend a fixed portion of their premium
collections on care and quality improvements. In case a company
fails to do so, it would be obliged to refund the amount to its
customers.
Besides, Aetna also lobbied for a legislation to withdraw the
bill’s directive requiring insurance for all Americans. It even
solicited for bills to exclude brokers’ compensation from the
calculation of the above mentioned premiums, allow the Department
of Health and Human Services to directly negotiate drug prices, as
well as allow the establishment of a Medicare Part D prescription
drug program and an insurance marketplace on a national scale.
Apart from the Fed, Aetna also lobbied the Centers for Medicare
and Medicaid Services as well as the Department of Health and Human
Services.
Though the provision of minimum medical ratio maintenance came
into effect at the outset of this year, Aetna did not seem to be
much affected by this. The company posted strong results in the
first half of 2011, with operating earnings of $2.78 per share,
partially driven by declining utilization and medical cost trends.
Based on these results and the outlook for the remainder of the
year, management has recently upped it full-year 2011 operating
earnings per share guidance range to $4.60 - $4.70.
Presently, Aetna is eying the opportunities emerging from the
Health Care Law, such as the collaborative provider business models
and health information technology connectivity solutions as well as
investment in these functions to gear itself for a long-term
growth.
Aetna’s rival Cigna Corp. (CI)
spent approximately $380,000 during the quarter, down 32% year over
year but 36% sequentially, while WellPoint Inc.
(WLP) spent $1.3 million, up 17% year over year
and down 3% sequentially.
AETNA INC-NEW (AET): Free Stock Analysis Report
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