Aetna’s $37 Billion Takeover of Humana Enjoined

WASHINGTON (CN) — A federal judge Monday blocked health insurance giant Aetna’s $37 billion acquisition of Humana, citing antitrust concerns of reduced competition.

In a 158-page ruling, U.S. District Judge John Bates concluded that the merger would likely substantially lessen competition in the market for individual Medicare Advantage in all 364 complaint counties, and that antitrust laws apply to competition between Medicare Advantage providers.

The merger would allow Aetna to cover more than 4 million senior citizens and capture the biggest market share of Medicare Advantage plans.

The two companies also are among the largest insurers for individual insurance plans sold in the public exchanges created by the Affordable Care Act. They competed in more than 100 counties.

The companies claimed the merger would not harm competition, and that technological strengths and relationships with healthcare providers could actually benefit consumers.

Bates found those arguments “unpersuasive.”

He found that the merger could harm competition in public exchanges in three Florida counties, and that federal regulations might not protect against rate increases and reduced benefits.

“This conclusion is based on identification of the proper product market, the overwhelming market concentration figures generated by the merger, and the considerable evidence of valuable head-to-head competition between Aetna and Humana, which the merger would eliminate,” the opinion states.

“There is insufficient evidence to conclude that Humana’s market share will decline such that the merger would not increase market concentration or that the markets are too volatile to reasonably predict the anticompetitive effects of the merger,” Bates continued.

He found that new competitors and proposed divestitures would not alleviate potential harm to competition.

Deputy Assistant Attorney General Brent Snyder hailed the ruling as a “victory for American consumers – especially seniors and working families and individuals.”

“Competition spurs health insurers to offer higher quality and more affordable health insurance to seniors who choose Medicare Advantage plans and to low-income families and individuals who purchase insurance from public exchanges,” Snyder said in a statement.

Joining the Department of Justice in the lawsuit were Delaware, Florida, Georgia, Illinois, Iowa, Ohio, Pennsylvania, Virginia and the District of Columbia.

The Department of Justice said the ruling will save taxpayers roughly $500 million a year.

“The Justice Department and our state partners brought this case because substantial evidence showed that direct competition between Aetna and Humana led the companies to offer more generous benefits at lower prices,” the department said.

The ruling is subject to appeal.

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