Ex-Aetna chief criticizes insurance mandate

Mon Jun 18, 2012 12:39pm EDT

Chairman and CEO of Aetna, Ron Williams attends a meeting between Secretary of Health and Human Services Kathleen Sebelius and major insurance company executives in the Roosevelt Room of the White House in Washington, March 4, 2010. REUTERS/Jason Reed

Chairman and CEO of Aetna, Ron Williams attends a meeting between Secretary of Health and Human Services Kathleen Sebelius and major insurance company executives in the Roosevelt Room of the White House in Washington, March 4, 2010.

Credit: Reuters/Jason Reed

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(Reuters) - The recently retired head of health insurer Aetna Inc criticized the component at the heart of the U.S. healthcare overhaul law, known as the individual mandate, and predicted it would not be upheld.

The Supreme Court is expected to rule before the end of the month on the law, championed by U.S. President Barack Obama and designed to expand coverage to more than 30 million uninsured Americans.

At the center of the case is the mandate, which requires people to buy insurance or pay a penalty. Insurers have maintained the mandate is necessary in order to ensure healthy people sign up for coverage to help balance the insurance pool if the law is also to require companies to cover less-healthy Americans.

In an opinion article published in The Wall Street Journal entitled "Why I No Longer Support the Health Insurance Mandate," Ron Williams, Aetna's former chairman and chief executive, said he now believes "the legislation raises serious constitutional concerns."

"Most seriously, Congress insisted on describing personal inactivity -- in this case, the failure to purchase insurance -- as interstate commerce within its regulatory reach," Williams wrote in the piece. "Americans were alarmed, rightly, that this could empower future legislatures to mandate that citizens engage in activities none of us would think reasonable today."

He also said the process that led to the law "was driven by partisan politics," resulting in "structural flaws."

"For example, the mandate should have been framed as a traditional tax -- a move that could have bolstered the Act's constitutionality," Williams said, who noted that he is not a lawyer or a Constitutional expert.

Williams concluded the mandate "will not be upheld."

The former Aetna chief said his initial support for the mandate was as a companion to requirements in the law that insurers cover everyone regardless of health status.

Insurers have said the mandate is critical if they are to provide coverage regardless of health status. Otherwise people will buy insurance only when they get sick, driving up costs and premiums.

"The attitude in the industry is continue to defend the mandate until it's not there, and then we'll worry about what we're going to advocate for," said Robert Laszewski, who consults for health insurers as president of Health Policy and Strategy Associates.

In an emailed statement, a spokesman for the industry's trade group, America's Health Insurance Plans, said, "There has always been broad agreement that the insurance market reforms included in the (law) cannot work without universal coverage."

Aetna's current CEO, Mark Bertolini, has criticized the mandate as weak because the penalty for individuals forgoing insurance is too low.

"If you get rid of it, I don't know that it makes all that much of a difference," Bertolini told Reuters in an interview earlier this year.

Williams was CEO of the No. 3 U.S. health insurer for about five years, including a tumultuous time for the industry when Congress was debating the overhaul law, which was passed in 2010.

Williams, who commented frequently during the health reform debate, retired as chairman of Aetna in April 2011, ceding the post to Bertolini.

Williams was one of roughly a dozen CEOs who met with Obama just after his inauguration in January 2009 to discuss the U.S. economy.

(Reporting By Lewis Krauskopf; editing by Andrea Ricci and Jeffrey Benkoe)

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