CVS Health is committed to keeping Aetna headquartered in Hartford, Connecticut, for the next decade as it seeks approval of their merger from the state’s insurance commissioner.
Last year, Aetna announced plans to move its headquarters to New York City, but CVS put those plans on hold in January after announcing its intent to buy the company for $69 billion. In a commitment letter (PDF) to the state, CVS Executive Vice President, Chief Policy and External Affairs Officer and General Counsel Thomas Moriarty said the company would keep Aetna in its current location for the next 10 years.
CVS also promised to keep employee levels at the Connecticut office at approximately 5,291 for four years following the close of the deal.
The commitment came as executives with both CVS and Aetna pled their case for the deal’s approval before members of the Connecticut Insurance Commissioner. Moriarty and nearly a dozen other representatives argued that the merger would benefit consumers by allowing the two companies to join forces to bring down rising healthcare costs.
Two economists from Georgia State University urged the state to collect information around how drug formularies are developed and offered, whether insurance plans are adhering to metrics like network adequacy and quality, and whether members have sufficient access to quality care.
But the experts also acknowledged that vertical mergers generally benefit consumers by lowering costs and improving efficiencies around product delivery.
State officials appeared to embrace those arguments as CVS and Aetna executives assured them that there would be appropriate firewalls between the new company’s PBM enterprise—which contracts with numerous insurers—and Aetna. They also emphasized the ability to combine patient data to effectively manage medications, reduce readmissions and provide more localized care.
And when officials pressed CVS and Aetna on how two entrenched players planned to fix a “broken” system, executives pointed to newly aligned incentives borne out of the new company.
“We’re no longer in a situation where one side’s cost is another side’s revenue,” said Paul Wingle, Aetna's vice president of operations. “Ours are completely aligned.”