"This is how the mafia would operate in Washington," the Huffington Post wrote in its newsletter.
Bernie Sanders tweeted out: "Aetna's threat to Dept. of Justice: If you reject our merger, we will pull out of health exchanges."
The storyline was a compelling one: Aetna, the insurance giant, was playing hardball, and using its customers' health plans as a bargaining chip to extract a favor from the Justice Department.
The true story was a bit less exciting, but more revealing. For starters, Aetna's "threat" was nothing more than Aetna responding directly to a specific question DOJ had asked, and explaining how the insurer needed additional market power in order to survive life in the exchanges.
Here's the background: Aetna and Humana are two of the six largest health insurance companies in the U.S., and Aetna wants to buy Humana. On July 21, DOJ announced it was suing to block the merger.
On August 15, Aetna announced that it was pulling healthcare plans from the Obamacare exchanges in 11 states — leaving Aetna plans on only four state exchanges.
HuffPo's argument, taken up by Bernie Sanders and other liberal lawmakers and journalists, was that Aetna pulled out of those 11 exchanges not for market reasons but out of retaliation for DOJ's suit — and a July 5 letter was their smoking gun
"It is very likely that we would need to leave the public exchange business entirely," Aetna CEO Mark Bertolini wrote to DOJ officials, "and plan for additional business efficiencies should our deal ultimately be blocked."
HuffPo ran Aetna's letter, but they didn't publish the letter it was responding to. I called DOJ Wednesday and asked for their letter to Aetna. DOJ said they couldn't provide it, and that they hadn't provided Aetna's letter to any journalists, but that "a different agency" had done that.
An Aetna spokesman provided me with the June 30 letter from DOJ asking for exactly what Aetna's Bertolini had provided: "Explain how [the transaction being blocked]," DOJ lawyers wrote, would "affect Aetna's business strategy and operations, including Aetna's participation on the public exchanges related to the Affordable Care Act and any products or geographic areas in which Aetna may withdraw or reduce operations."
Aetna also sent this letter to the Department of Health and Human Services, according to an Aetna spokesman.
There's some more background needed here. Back on Feb. 1, the Associated Press reported that Aetna "lost more than $100 million last year on its exchange business..." Bertolini said at the time: "We continue to have serious concerns about the sustainability of the public exchanges."
These comments earned Bertolini a phone call. "Aetna Chief Executive Mark Bertolini said U.S. Health and Human Services Secretary Sylvia Burwell called him Feb. 1 shortly after he made critical remarks during an earnings conference call," Kaiser Health News reported a few weeks later.
Over the month of February, HHS announced a couple of changes that helped insurers. First, the administration proposed increasing Medicare payments to insurers, a proposal that boosted insurer stocks. HHS that month also announced loosening of rules on insurance plans.
After these two victories, Bertolini was more bullish on the exchanges, according to Kaiser Health News' report.
This week, some observers wondered whether Aetna only wanted to be on the exchanges in order to curry political favor with HHS.
The bigger picture here is that Obamacare created an increasingly co-dependent relationship between the insurance industry and government. Obama officials like Burwell desperately needed the insurers to play ball — and to stay healthy — in order to make Obamacare work. That's one reason the administration took extraordinary (and possibly illegal) steps to subsidize insurers.
When you increase government's role in industry, this is inevitable. More regulations beget more subsidies. More hardball bargains from CEOs and cabinet secretaries, and more sweetheart deals pop up between them, as well. This creates more consolidation in industry.
It all becomes a breeding ground for corruption and cronyism. The Obamacare Revolving Door is a clear symptom of this. The current Medicare chief, Andy Slavitt, is a former executive at United Health. The woman he replaced, Marilyn Tavenner, left to take the helm at the insurance lobby America's Health Insurance Plans.
The Obamacare revolving door has spun constantly.
HHS, shortly after the bill passed, hired former Humana lobbyist Liz Fowler. Fowler then cashed out to become top lobbyist at Johnson & Johnson. HHS general counsel William Schulz was formerly a lobbyist for Barr Pharmaceuticals who makes the morning-after contraception required by HHS's contraceptive mandate.
The Bernie Sanders story is a simplistic one: the CEO is the mobster, shaking down poor little HHS. But the shaking goes both ways. When government injects itself further into industry, and when industry lobbies for more government support and protection, nobody can be surprised if unseemliness pops up. This is the business they've chosen.
Timothy P. Carney, the Washington Examiner's senior political columnist, can be contacted at email@example.com. His column appears Tuesday and Thursday nights on washingtonexaminer.com.