I interviewed Aetna CEO Mark Bertolini at Fortune Brainstorm Health yesterday, where he said the Affordable Care Act needs to be fixed, not repealed. “This nation has never passed a major piece of social legislation without bipartisan support” prior to the ACA, he said, “and every other major piece of social legislation has been changed every year.” Unless both parties figure out how to work together on health care, and fix the problems of the ACA, health care policy will remain in flux—a political football.
Nevertheless, the news this morning is that the House has lined up the Republican votes it needs to pass a health care bill. A breakthrough came late yesterday when two moderate Republicans, Reps. Fred Upton and Billy Long, met with President Trump at the White House and flipped their votes from “no” to “yes” after he committed to backing an amendment spending $8 billion over five years to fund high-risk pools. It’s still not clear that that bill can pass the Senate.
Bertolini also told the group yesterday that medical care and genetic makeup are less important in determining health care outcomes than behavior and geography. “Your zip code is more than your genetic code,” he said.
Incidentally, Bertolini is one of the growing group of CEOs who believe that business leaders have an urgent imperative to demonstrate a commitment to social goals and restore their reputation with the public. In 2015, he raised the company’s minimum wage to $16, and also provided generous health and wellness benefits to all his employees. I’m hoping he’ll join The CEO Initiative announced earlier this week, which is designed to encourage and support corporate leaders who recognize the need to focus on purpose beyond profits. Bertolini says, by the way, that his efforts to improve the lot of Aetna’s lowest-paid workers also have boosted his bottom line.
More news below.
• The Fed Won’t Be Led
The Federal Reserve remains on track for two more interest rate hikes this year after a statement playing down the economy’s first-quarter weakness as “likely to be transitory.” Markets now imply a 70% probability of the Federal Funds target rate being raised another 0.25 percentage point in June. The Fed’s language in its post-meeting statement reflected its determination not to let financial markets, and their sometimes febrile reaction to weak individual data points, pressure it into normalizing monetary policy.
• Facebook Approaches the Plateau
Facebook’s revenue rose 49% on the year in the first quarter, way ahead of expectations, but its shares fell 2.8% on concerns that growth will soon flatten out. The company has already said it can’t put more ads on users’ feeds without risking a backlash. Facebook’s cost base is also due to expand as it hires another 3,000 human moderators to address problems with fake news and users posting offensive or disturbing material.
• Uber’s $250 Million Golden Hello to Lewandowski
Silicon Valley’s most closely watched lawsuit produced more juicy details at a hearing Wednesday. Anthony Lewandowski received over $250 million worth of Uber stock awards that began vesting the day after he left Alphabet’s self-driving venture Waymo, lawyers for Waymo said. Waymo, which accuses Lewandowski of stealing its intellectual property, said this was circumstantial proof of bad intent. Uber said the vesting was backdated to reflect his time at Otto, which Uber bought for a reported $680 million only six months after Lewandowski and Lior Ron (another Waymo alum) founded it. The judge hearing the case said Waymo had no smoking gun and was still considering Uber’s request to send the case to a confidential arbitration tribunal, rather than the jury trial that Waymo wants. Lewandowski stood down from Uber’s self-driving projects recently, apparently to protect them from the fallout from the lawsuit.
• Elle Ne Passera Pas!
Emmanuel Macron and Marine Le Pen traded insults for two and a half hours without either landing a killer blow, in the last major campaign event of France’s presidential elections. The stalemate favors the centrist Macron, who still commands a near 20-point lead over the far-right Le Pen ahead of Sunday’s run-off. Macron scored best in his critique of Le Pen’s plans to withdraw from the euro. Le Pen has gained nothing in the polls from softening (and thus blurring) that message in recent days.
Around the Water Cooler
• Apple Throws A Billion at ‘Advanced Manufacturing’ in the U.S.
CEO Tim Cook said Apple will create a $1 billion fund to invest in “advanced manufacturing” in the U.S., in what appeared to be the latest effort to deflect criticism about its own dependence on a largely foreign supply chain, where rights groups continue to allege widespread abuses of labor. The company’s reliance on overseas suppliers also exposes it on other fronts: according to Bloomberg, Qualcomm is preparing to ask the International Trade Commission, which polices imports to the U.S., to block iPhones from the country as part of the two companies’ ongoing patent dispute. It’s an ironic echo of when Apple used the same tactic against Samsung in an earlier patent dispute in 2013.
• Another Inside Job at Big Food
General Mills, maker of Cheerios and Annie’s, raised its current president and chief operating officer Jeffrey Harmening to the post of CEO. He’ll succeed Ken Powell, who is retiring at the end of the month after a decade at the top of the cereals giant. Harmening faces the same dilemma as many of his Big Food rivals—stagnant or falling sales caused by changes in consumer taste, and the exposure of high legacy cost bases. One noticeable thing: as with Coca Cola and Hershey already this year, General Mills has opted for an insider to face that dilemma.
• Who’s Minding the Shop?
The Treasury Department said Keith Noreika will take over as Comptroller of the Currency, replacing Tom Curry as the supervisor-in-chief of national banks. Noreika is a lawyer by trade who has specialized in advising banks on regulatory issues. The lack of a permanent Comptroller, at a time when the administration still has to fill the post vacated by Daniel Tarullo at the Federal Reserve, arguably expands the effective vacuum at the top of the country’s bank supervisory architecture in the short run, even as the administration plots a major roll-back of Obama-era regulations. The administration did however fill one key vacancy yesterday, with Jay Clayton’s confirmation at the head of the Securities and Exchanges Commission.
• Tesla Bleeds but Marches On
Tesla Motors’ net loss widened sharply in the first quarter as a result of its consolidation of SolarCity, bringing back into focus the governance risks at Elon Musk’s venture. The car division reiterated its guidance on production and deliveries, as well as on the capital spending tied to rolling out the Model 3. As always, the avoidance of negative surprises on those fronts is news in itself, given the challenge of raising output six-fold within two years. However, the company’s shares fell over 3% on concerns that the cheaper Model 3 will cannibalize sales of the higher-margin Model S. Despite that, and March’s cash call, they’re still up over 40% this year.
Summaries by Geoffrey Smith; email@example.com @geoffreytsmith