Aetna left some ACA exchange markets to boost its defense of Humana merger, court says

Gavel and flag in courtroom
Evidence supports the idea that Aetna had good business reasons for reducing its exchange footprint across the country, but “it does not show that Aetna withdrew from these specific counties for business reasons,” Judge John Bates wrote in an opinion. Getty/AlexStar

Contrary to its claims, Aetna stopped offering public exchange plans in certain counties in order to bolster its defense for its acquisition of Humana, according to a federal judge who ruled to block the deal.

In mid-August, Aetna announced that it would reduce its Affordable Care Act marketplace participation from 778 counties in 2016 to 242 in 2017, citing continued losses in those markets. The decision came roughly a month after the Justice Department sued to block both its purchase of Humana and Anthem’s deal with Cigna.

That timeline is key, Judge John Bates writes in his 158-page opinion explaining his ruling against the Aetna-Humana deal. For example, when the DOJ deposed Aetna CEO Mark Bertolini while conducting its investigation prior to filing its complaint, Bertolini’s lawyer said that if Aetna was not “happy” with the results of an upcoming meeting regarding the merger. “We’re just going to pull out of all the exchanges,” he added.

Bertolini also tried to leverage Aetna’s exchange participation in his communications with Department of Health and Human Services Secretary Sylvia Mathews Burwell, the court said, and crystallized his position in a letter he sent to the DOJ in July. That letter drew a rebuke from some lawmakers when it came to light, but Bertolini argued there was “simply no basis” to believe Aetna acted in bad faith regarding its exchange participation.

Aetna maintained that position during its antitrust trial, arguing its choice to exit certain exchange markets—including the 17 Florida counties the DOJ identified as being potentially anticompetitive—was purely for business reasons.

Indeed, evidence supports the idea that Aetna had good business reasons for reducing its exchange footprint across the country, but “it does not show that Aetna withdrew from these specific counties for business reasons,” Bates wrote.

The proof of that is in a slew of emails between Aetna executives when they were deciding which individual markets to exit, the opinion noted. In one exchange, upon learning that Humana still operated plans in the 17 exchanges, an executive replied, “Then that makes it easy, we need to withdraw from those.”

Even more telling, the court said, are emails that show Aetna executives trying to conceal the reasoning behind their recommendation to withdraw from the 17 counties, hoping to prevent that evidence from coming to light during the trial’s discovery phase. For example, Mayhew wrote in one such email that “I was told to be careful about putting any of that in writing.”

Provider groups laud court’s decision

While Aetna did not respond to a request for comment on the court’s decision, some groups were happy to hear that one of two major insurance mergers did not pass regulatory muster.

"This decision sends a strong message that bigger isn't better when it comes to health insurers,” Robert W. Seligson, president of the Physicians Advocacy Institute, said in an emailed statement. “Without competition, a dominant health insurer has little incentive to keep premiums in check or to contract with a broad network of physicians and other healthcare providers."

The American Medical Association, which has lobbied continuously against both the Aetna-Humana and Anthem-Cigna deals, was particularly pleased about what the ruling in the former case meant for Medicare Advantage enrollees.

“The court ruling halts Aetna’s bid to become the nation’s largest seller of Medicare Advantage plans and preserves the benefits of health insurer competition for a vulnerable population of seniors,” AMA President Andrew W. Gurman, M.D., wrote in an emailed statement. The decision, he added, “sets a notable legal precedent by recognizing Medicare Advantage as a separate and distinct market that does not compete with traditional Medicare.”