With the Anthem-Cigna antitrust trial already under way, next week it will be Aetna and Humana’s turn to begin defending their deal in federal court.
Both pairs of companies are going up against the Justice Department, which filed suits to block their mergers on grounds that they would illegally harm competition in key health insurance markets. The Aetna-Humana trial begins Dec. 5, and in preparation both sides have filed pretrial briefs outlining their core arguments.
In its brief (PDF), the Justice Department makes two main points: First, it argues that the deal will “substantially lessen” competition in the Medicare Advantage market, which despite the defendants’ argument, should be treated as distinct from traditional Medicare. And Aetna’s plan to divest MA assets to Molina isn’t enough, as it faces its own regulatory hurdles and “would not restore the competition that would be lost due to the merger,” the brief says.
Second, the DOJ says the deal will harm competition in the individual marketplaces. Aetna tried to prevent the court from considering the deal’s effects on the exchange markets in Florida, Georgia and Missouri by exiting each of those states’ exchanges, “but the court should not allow Aetna to avoid antitrust scrutiny by essentially shuttering its factory,” the brief argues.
Aetna, though, argues in its brief (PDF) that it exited certain exchange markets “in light of substantial losses and unrelenting risk,” not because of the threat of litigation. And whatever its motivation for the exchange exits, the result is that Aetna no longer competes with Humana in those marketplaces, the brief says, adding that in such a new, volatile market, entrances and exits are “common and ubiquitous.”
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As for the merits of its planned MA divestiture, Aetna argues that Molina is “poised and ready to address the government’s concerns and minimize member disruptions in the transition.” Further, MA and traditional Medicare aren’t different enough to consider them as separate markets, so with traditional Medicare “properly included” in the market being examined, the DOJ cannot prove the deal will have anticompetitive effects, the brief says.
In an earlier pretrial development, the Justice Department sought to block Aetna’s attempt to depose Centers for Medicare & Medicaid Acting Administrator Andy Slavitt. In a motion (PDF) filed in response, the government argues that Slavitt is not a unique source of any knowledge that is critical to resolve the case.