Judge says no to Aetna/Humana merger

Insurance powerhouse Aetna won’t be joining with Humana anytime soon. A U.S. District Court judge has blocked the proposed merger on antitrust grounds, greatly because of the impact it could have on competition among the Medicare Advantage plans.

The Department of Justice had petitioned the court that the merger would reduce competition among Medicare plans in at least 21 states, likely driving costs up for seniors. The deal also would have consolidated the market of large national insurers from five to three, reducing opportunities for regional innovation and initiatives.

“Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve,” said Attorney General Loretta E. Lynch in a July 20 Department of Justice announcement of the agency’s intent to sue against the merger. “These mergers would restrict competition for health insurance products sold in markets across the country and would give tremendous power over the nation’s health insurance industry to just three large companies.  Our actions seek to preserve competition that keeps premiums down and drives insurers to collaborate with doctors and hospitals to provide better healthcare for all Americans.”

Aetna proposed its $37 billion deal to acquire of Humana in July 2015. Now that the deal is off, Aetna must pay Humana a $1 million “breakup fee” as part of the agreement terms, notes a Bloomberg article.

Today’s Aetna/Humana decision drops analyst expectations in the approval chances for another big merger on the table—Anthem and Cigna. “If the judge blocked this deal, there is very little, if any, chance that the Anthem-Cigna deal gets cleared,” Jason McGorman, a Bloomberg Intelligence analyst, said in the Bloomberg article.

Pamela Tabar

Pamela Tabar was editor-in-chief of I Advance Senior Care from 2013-2018. She has worked as a writer and editor for healthcare business media since 1998, including as News Editor of Healthcare Informatics. She has a master’s degree in journalism from Kent State University and a master’s degree in English from the University of York, England.