Federal Court Blocks Aetna-Humana Health Insurance Merger

January 23, 2017 - Today, a federal judge ruled that the health insurance merger between the healthcare payers Aetna and Humana should be blocked on the grounds that it would create antitrust issues, according to The New York Times. The health insurance merger lawsuit was brought forward by the Department of Justice during the summer of 2016.

Judge John D. Bates of the Federal District Court for the District of Columbia sided with the Department of Justice. Bates wrote that the Aetna-Humana health insurance merger would have led to a reduction in competition for Medicare Advantage plans and health plans sold on the exchanges.

Judge Bates did not agree with the claims made by the attorneys for Aetna and Humana in terms of regulations keeping the consolidated company from increasing premium prices or decreasing benefits. Additionally, the federal judge did not believe that the divestitures were satisfactory for alleviating the concerns around market competition.

“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,” Judge Bates wrote.

An Aetna spokesperson told The New York Times that the company is considering whether to move forward with an appeal. Aetna shares dropped by 2.8 percent today and Humana shares were also down.

Despite Judge Bates’ decision, some healthcare experts support health insurance mergers and do not see them posing a monopoly on the market. Patrick Pilch, Managing Director and National Healthcare Advisory Leader of The BDO Center for Healthcare Excellence & Innovation, explained his viewpoint in December 2015.

“I don’t envision seeing monopolies, possibly oligopolic organizations. There certainly will be market concentrations,” Pilch began. “One could make the argument that these payer mergers will lead to single payer or maybe a utility so that it becomes regulated.”

“I believe that this will be a long way away. Through the FTC, regulators are looking at where the measures of concentration are and how they play there,” Pilch said. “As far as a pure monopoly, I don’t see it as I do believe there will be considerable pushback by the FTC.”

With regard to the health insurance merger between Cigna and Anthem, Judge Amy Berman Jackson has not issued a ruling regarding whether or not she will block the consolidation.

Andrew W. Gurman, M.D., President of The American Medical Association, wrote in a public statement that the federal court was able to support elderly patients by blocking the health insurance merger between Aetna and Humana.

The halt to the $37 billion health insurance merger keeps health insurance competition that enables effective patient care for the elderly through Medicare Advantage plans. The court ruling would “preserve competition and protect high-quality medical care from unprecedented market power that Aetna would acquire from the merger deal,” said Gurman.

Judge Bates pointed to findings that show competition for the commercial health insurance market would be negatively impacted in three counties in Florida if the merger was to continue.

“Consumers throughout the country spoke with a clear voice that the merger was anticompetitive,” David Balto of the Coalition to Protect Patient Choice stated regarding the Aetna-Humana merger block. “The DOJ and the court heard answered that call. The evidence was crystal clear that when health insurers merge consumers lose by paying higher premiums and receiving poorer health care.”

“The evidence was compelling that the merger would harm millions of vulnerable medicare beneficiaries and that the attempts to present Molina as a potential buyer to solve the problem were no more than a Potemkin village,” Balto concluded.

Healthcare payers looking to consolidate may need to consider consumer interests and how it may impact market competition before moving forward with a merger.