Aetna-Humana merger close to clinching state approvals

Finish line sign

After getting the green light from New York’s insurance regulator, Aetna is now close to receiving all of the state approvals it needs for its merger with Humana.

In a letter sent this week to Aetna, the New York Department of Financial Services said it would sign off on the deal if it met certain conditions to preserve competition in the state’s Medicare Advantage market, people familiar with the matter tell Bloomberg. The letter is not yet public.

With that approval, the insurer now has “change of control” approvals in 18 out of the 20 states required for its acquisition of Humana to close, Aetna spokesman Matthew Clyburn told FierceHealthPayer in an email. Georgia has announced that it will hold a public hearing on the transaction on July 26.

In its quest to win state regulators’ approval, the Aetna-Humana deal has faced little opposition. One exception is the Missouri Department of Insurance, which issued a preliminary order in May saying the companies must “cease and desist” from selling in certain markets in the state if the deal closes, citing antitrust concerns.

The fact that they are close to finishing the state review process is likely welcome news for Aetna and Humana, which both have taken hits in the stock market amid news that federal antitrust officials are eyeing their deal skeptically.

The chief concern among state and federal regulators alike is the preservation of competition in MA markets. To that point, Aetna plans to divest at least $1 billion worth of MA assets, on which other insurers have already started to bid. Such an asset sale, which is conditional upon the deal closing, could allow smaller players such as WellCare to boost their presence in the lucrative MA market.

Critics of the deal, though, have pointed out that such antitrust remedies are often insufficient, as research has shown that since many buyers end up exiting the market, competition generated by divestitures is short-lived.

- read the Bloomberg report
- here's the Georgia announcement