In order to “preserve robust competition” in the Medicare Advantage market, Aetna and Humana have agreed to sell some of their MA assets to Molina Healthcare in two transactions totaling $117 million, the companies announced.
Molina’s acquisition of Aetna and Humana’s MA assets, which would boost its MA membership by about 290,000 across 21 states, is contingent upon Aetna’s acquisition of Humana closing. The Justice Department recently filed a lawsuit to block the transaction, citing a concern about preserving MA competition as one of its key arguments.
Aetna and Humana have vowed to fight for their deal in court, arguing that the DOJ’s analysis of the anticompetitive effects of the transaction is flawed because it defines the Medicare market too narrowly, treating MA and traditional Medicare as separate entities.
“We believe that these divestitures taken together would address the Department of Justice’s perceived competitive concerns regarding Medicare Advantage,” Aetna CEO Mark Bertolini said in the announcement. “We are confident in Molina’s ability to deliver continued access to quality care for our members in these areas.”
Yet federal officials were highly skeptical about the ability of Aetna’s proposed divestitures to ease antitrust concerns, calling them “inadequate and incomplete” and noting that previously divested health plans often soon failed, FierceHealthPayer has reported.
In other news, Bertolini said in Aetna’s second-quarter earnings report Tuesday that it will abandon its plans to expand on the public insurance exchanges in 2017 and undertake “a complete evaluation” of future participation in its current 15-state footprint. The move comes as a result of updated 2016 projections for Aetna’s individual products and “the significant structural challenges facing the public exchanges,” he said.
Bertolini has been a strong backer of the Affordable Care Act exchanges--even as other major insurers have pulled back--saying it is too early to give up on the still-maturing marketplaces.