Federal court blocks proposed merger of Aetna and Humana

The U.S. District Court for the District of Columbia today prohibited two of the nation’s largest health insurers from merging, concluding that the proposed merger of Aetna and Humana was likely to substantially lessen competition for individual Medicare Advantage plans in all 364 counties challenged by the federal government in the antitrust case. “The companies’ rebuttal arguments are unpersuasive: federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits, and neither entry by new competitors nor the proposed divestiture to Molina would suffice to replace competition eliminated by the merger,” wrote U.S. District Judge John Bates. “The merger would also be likely to substantially lessen competition on the public exchanges in three Florida counties….Finally, the Court is unpersuaded that the efficiencies generated by the merger will be sufficient to mitigate the anticompetitive effects for consumers in the challenged markets.” AHA President and CEO Rick Pollack said, “Today’s decision rightly puts the needs of patients first in ensuring they have access to health care coverage that is affordable. The Court’s decision to halt the Aetna-Humana deal promises more than 2.7 million Medicare Advantage patients the benefits of greater competition, including lower out-of-pocket costs and more access to high-quality care. Humana is the second-largest Medicare Advantage insurer and Aetna the fourth with plans in more than 1,000 markets. If this deal had been allowed to proceed, it would have eliminated current competition as well as the possibility of future competition. Such consolidation would no doubt result in higher premiums and less choice. Competition in the insurance sector is essential to keeping Medicare Advantage healthy, growing and affordable for seniors; with today’s decision the court affirmed the importance of those benefits.”