Judge blocks Aetna-Humana deal

Gavel
A federal judge has ruled to block Aetna’s acquisition of Humana.

Saying that the deal would be anticompetitive in two key health insurance markets, a federal judge has ruled to block Aetna’s acquisition of Humana.

Judge John Bates issued his ruling (PDF) Monday in the antitrust trial that began Dec. 5. The Justice Department sued to block both the Aetna-Humana and Anthem-Cigna deals in July; a ruling against the latter deal was expected as soon as last week, but has not yet been announced.

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In Bates’ lengthy opinion (PDF), he concluded that Aetna’s purchase of Humana would “substantially lessen” competition in Medicare Advantage in all 364 counties identified in the government’s complaint. He sided with the government in affirming that Medicare Advantage and traditional Medicare are two distinct markets, noting that “the companies’ arguments are not persuasive.”

“In that market, which is the primary focus of this case, the merger is presumptively unlawful—a conclusion that is strongly supported by direct evidence of head-to-head competition as well,” Bates writes.

He also ruled that the deal would harm competition in the sale of individual commercial insurance on the public exchanges in three counties in Florida identified in the complaint.

Further, he said “the court finds that Aetna withdrew from competing in the 17 complaint counties for 2017 specifically to evade judicial scrutiny of the merger,” Bates wrote. Thus, he said he would give the company’s withdrawal decision for 2017 “little weight in predicting where Aetna will compete in later years.”

Aetna had faced scrutiny from some lawmakers for its exchange exit after a letter surfaced from CEO Mark Bertolini that seemed to tie the insurer’s exchange participation to the outcome of its acquisition of Humana. Bertolini, though, has maintained that Aetna’s decision to pull back from the exchanges was solely due to its deteriorating financial performance in that business segment.