Anthem's Boss Faces Tough Choices in Health-Care Debate

By Anna Wilde Mathews Features Dow Jones Newswires

Anthem Inc.'s business is swirling with uncertainty as Congress debates new health-care legislation. That means tough choices are looming for the insurer's chief executive, Joseph R. Swedish.

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One of those difficult decisions was revealed last week, when Anthem said it will withdraw from the Ohio insurance marketplace in 2018. Anthem's departure leaves 18 Ohio counties poised to have no plans available through the marketplace next year.

Anthem is a huge player in the marketplaces created by the Affordable Care Act, and the Trump administration has threatened to stop federal payments that reduce costs for low-income people who get coverage in those exchanges. Insurers say the cost-sharing payments provide vital support.

The Ohio decision, Anthem said, was a reaction to a volatile market and uncertainty around key issues including the federal payments. Now, Mr. Swedish is weighing what to do in the 13 other states where Anthem offers marketplace plans. He says he wants to be sure consumers have access to affordable health care, and he's concerned about issues including the severity of cuts to Medicaid in final legislation.

Mr. Swedish, 65 years old, is also locked in high-stakes litigation. Anthem and Cigna Corp. are suing one another over their soured merger deal, which was terminated in May after courts blocked it on antitrust grounds. Anthem is also suing Express Scripts Holding Co., alleging it violated their contract. Express has said it believes the suit is without merit.

The former hospital executive, who became Anthem's CEO in 2013, sat down with The Wall Street Journal late last month to talk about the state of health care.

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Edited excerpts:

The Wall Street Journal: Where are you in the decision-making process with regard to the exchanges?

Mr. Swedish: It's a question of wanting to stay in, delving into the math that will dictate the decision that we're responsible for making on behalf of the stability of our company, as well as the performance that we can give our customers. The last thing I want to do is give them a substandard product, substandard price, and if we can't meet that test, then there's some very serious doubt we can remain in some markets.

WSJ: What options are on the table regarding the exchanges?

Mr. Swedish: There are still decisions yet to be made regarding [federal cost-sharing payments] and the continuation of the [ACA tax on health insurers], which is now under a moratorium. The challenge for us is pricing relative to the decisions that may be made, which could translate to as much as a 25% premium increase. How can the markets we support tolerate that level of premium escalation? That's a judgment call we're gonna have to make.

WSJ: Are the marketplaces in a death spiral?

Mr. Swedish: It's an unfortunate characterization. There are markets that are significantly unsustainable. There are others that we have performed, call it reasonably well, under the circumstances.

WSJ: Should CEOs have a voice in big public debates like the one over the ACA?

Mr. Swedish: Absolutely. We're leaders of companies that represent millions of Americans, in our case over 40 million members. We believe we are their voice. And we should speak on their behalf.

WSJ: Do you worry about becoming the subject of a presidential tweet?

Mr. Swedish: Not really. I don't think we're worried about the tweets, because I know we are considered valued contributors to the debate.

WSJ: The House has passed a health bill and the Senate is working on one. What concerns you in that legislation?

Mr. Swedish: Change to correct the ACA will be disruptive. Question is, can organizations like ours help the American public make the leap from what they've known to what may be passed? That is a tall order. For instance, the creation of high-risk pools [special coverage options for people with health conditions] -- will the right rules of engagement, the right funding levels occur in order to make them sustainable? That's a serious concern to us. Number two, is Medicaid funding. How then will the poor and vulnerable be treated as a result of choices that'll be made?

We're extremely concerned about our membership being supported in terms of access and affordability as well as the ability to get to high-quality health care.

WSJ: With the Cigna deal off the table, what kinds of deals interest you?

Mr. Swedish: Being a growth-minded company, obviously we are looking to acquire -- grow by mergers and acquisitions. We've made it very clear that we are very committed to the Medicare program. We have tremendous potential in the Medicaid arena. We certainly are looking for continued growth in servicing [employer and consumer health plans].

WSJ: Insurers don't have a great reputation with customers. What are you doing to improve that?

Mr. Swedish: We're retraining our entire workforce to be better aligned with needs of the customer, given the contemporary demands that come upon us. I'm a great believer that, if you don't measure it, you can't manage it. So, we've established net promoter scoring so that we are quarterly assessing how well we perform related to what the consumer experience is with us. [Net promoter score is a measurement of satisfaction and loyalty based on the willingness of customers to recommend a business to others.] We've seen remarkable improvement in the score.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

June 13, 2017 09:14 ET (13:14 GMT)