Aetna, Humana: DOJ fails to grasp market realities

Justice Department building inscription

Last Friday Aetna and Humana issued responses to the DOJ’s antitrust suit launched July 21, alleging the DOJ’s concerns stem from “fundamental misconceptions about marketplace realities.”

In separate filings, Humana and Aetna make the case that traditional Medicare and Medicare Advantage are competitive alternatives to one another. Humana’s filing quotes Florida state insurance regulators who say “Medicare Advantage ... competes directly with traditional Medicare.”

There is no research to indicate health insurance mergers benefit consumers, according to some healthcare economists, yet Aetna’s attorneys argue the merged company would realize economies of scale “to lower its costs” and “pass those savings on to its customers.”

Insurance mergers could provide sorely needed leverage in negotiations with hospital providers, who are understandably nervous. While an insurance mega-merger could lower hospital bills, Harvard Business School insurance market expert Leemore Dafney told NPR­ that she sees no evidence "that reduction in provider payments leads to reduction in insurance premiums." 

Health law expert Bryan Rotella told FierceHealthPayer via email, "As a lawyer who served as a general counsel involved in the nation's largest ambulance company merger last October, Aetna's arguments about advancements in patient service that can come from the combination of two seemingly competitors are on point. The government is also being somewhat hypocritical in that the Affordable Care Act framers set the law up to encourage the mergers of healthcare providers to take on the overhead of IT and reporting needs at the expense of competition."

Aetna’s lawyers also pointed to the proposed Medicare Advantage divestitures with Molina in 364 counties as evidence the deal won’t harm competition.   

- read the Aetna filing
- here’s the Humana response
- read the NPR article