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CHI Health took out an ad in the Journal Star and other Nebraska newspapers last month warning that people with Aetna health insurance could face a tough choice in the coming weeks.

The health system and the insurer have been engaged in contract negotiations for more than a year and have yet to come to an agreement.

CHI Health said that if it can't reach a new deal with Aetna by Nov. 26, "CHI Health will be out of network for all Aetna commercial network plans."

Michael Schooff, CHI Health's medical director for primary care in the Omaha area, said Aetna is not willing to offer a reimbursement rate that allows the health system to care for patients the way it needs to or make the investments it needs to make.

"The cost of taking care of people has gone up," Schooff said, and if CHI Health were to accept Aetna's offer, "the quality of our care would have to go down."

He said CHI Health has made several concessions in negotiations, although he declined to provide details.

Aetna, on the other hand, has made no concessions, Schooff said, and "has seemingly been unwilling to move to the middle."

In an emailed statement, Aetna said it has been "working hard to reach an agreement with CHI Health Partners for more than a year, prior to them sending us notice they were terminating our current agreement."

The company said CHI Health is demanding rate increases that are "more than three times the rate of inflation."

According to media reports, Aetna has been in contract battles with several other health systems, some of which have been able to negotiate a new contract and some of which are still negotiating.

It's hard to know exactly who's telling the truth and how much of the truth they are telling, but according to tax filings, costs at CHI Health facilities have risen sharply over the past few years.

For example, at CHI Health St. Elizabeth in Lincoln, overall costs rose about $14.7 million from 2020-2023, with about $5 million of that increase for salaries and benefits.

At the same time, the hospital's revenue has declined, leading it to see a combined loss of $14.7 million in 2022 and 2023, compared with a combined net income of $17 million in 2020 and 2021.

CHI Health Bergan Mercy in Omaha has seen its expenses grow nearly $140 million over the same period, and though it has remained profitable, its net income has declined by more than $25 million since 2021.

Failure to negotiate a contract with Aetna will mean patients would be faced with either paying higher out-of-network costs to continue to see CHI Health-affiliated doctors and to use CHI Health facilities or finding new providers.

That reality has already hit for seniors who have Medicare Advantage health insurance plans through Aetna.

Though the insurer and CHI Health continue to negotiate, the current contract expired Oct. 1, leaving people with those plans scrambling.

"It's a frustrating situation," said David Tomka.

The Kearney man, who battles Type 2 diabetes and high blood pressure, said he's been fairly lucky so far.

He had his regular doctor's appointments right before his insurance coverage for his CHI Health doctors expired and his prescriptions are filled.

But he did recently have to drive across town to go to Kearney Regional Medical Center for an emergency instead of going to CHI Health Good Samaritan, which is near his home.

"It's frustrating when the insurance company doesn't seem to care about their patients," said Tomka, who is looking at Medicare Advantage Plans from other insurers.

He said he wishes health insurers would just let doctors do their jobs.

"I guess I find it frustrating that they take the mighty dollar over patient care," Tomka said.

The insurance industry, for its part, says health care companies need to get their costs under control.

AHIP, a national advocacy organization for health insurance companies, released an analysis last month that shows about 65 cents of every health care dollar spent goes to either prescription drugs or hospital care.

“Health plans are using all the tools at their disposal to shield Americans from soaring drug and hospital costs while providing access to high-quality health care as affordably as possible," AHIP President and CEO Mike Tuffin said in a statement accompanying the release of the analysis. "Bipartisan reforms are needed to end drugmakers’ abuse of the prescription drug patent system and protect consumers from opaque hospital billing practices."

The ballooning costs mean consumers and their employers continue to see large health insurance rate increases, with the Kaiser Family Foundation estimating that average health insurance rates were up 7% this year after rising 7% in 2023. And a survey by consulting firm Mercer predicts they will rise 6-7%, this year.

That's after health insurance cost increases averaged 3% annually over the previous 10 years, according to Mercer.

The company cited inflation as the big driver of cost increases, including big increases in prescription drug spending and labor costs.

Aetna alluded to that fact in its statement, noting that while it wants to come to an agreement with CHI Health for both commercial and Medicare Advantage plans, "we cannot agree to terms that would burden our members and local employers with significant health care cost increases."

CHI Health, for its part, also likely doesn't want to risk losing a significant number of patients.

The last time the health system had a battle with a major insurer that resulted in a contract not being renewed was in 2014-2015, when Blue Cross and Blue Shield of Nebraska terminated its contract because of what it said were costs that were too high at Alegent Creighton Health System in Omaha.

The dispute dragged on for several months before the two entities came to a new deal, and the loss of patients during the dispute led to a 75% decline in income for the CHI Health's Nebraska hospitals in its 2015 fiscal year.

St. Elizabeth was hit particularly hard, swinging from a $19 million profit in 2014 to a $9 million loss in 2015, as its revenue dropped by more than $40 million.