DOJ to require Harvard Pilgrim to divest health plan for merger

The Department of Justice is seeking to block Harvard Pilgrim Health Care's proposed merger with Health Plan Holdings unless it divests the Tufts Health Freedom plan, officials said Tuesday. 

Officials in the Justice Department’s Antitrust Division, along with the New Hampshire Office of Attorney General, filed a civil antitrust lawsuit Tuesday in the U.S. District Court for the District of New Hampshire to stop the deal.

The department proposed a settlement at the same time, approving UnitedHealth Group or an alternative approved buyer of Tufts Freedom, part of Health Plan Holdings' commercial health insurance business in New Hampshire. Officials said the deal would maintain competition for the commercial health insurance market for employers with fewer than 100 employees. 

“Americans spend trillions of dollars on healthcare each year, and competition between health insurers is vital to providing consumers with access to quality care at affordable rates," said Assistant Attorney General Makan Delrahim of the Antitrust Division in a statement. "This merger, as originally structured, likely would have led to higher prices, poorer quality, and reduced choice for many consumers throughout the state,”

RELATED: Harvard Pilgrim Health Care, Tufts Health Plan to merge

In 2019, Harvard Pilgrim and Tufts Health Plan announced plans to merge in an effort to "harness the combined strengths" of both organizations. The joint insurer would serve 2.4 million members in Massachusetts, Maine, Rhode Island, Connecticut and New Hampshire and would offer both employer-sponsored and government plans.

According to the department’s complaint, Harvard Pilgrim and Tufts Freedom are two of the three top commercial group health insurers that offer plans to small employers in New Hampshire. The department has closed its investigation into the merger’s potential effects in Massachusetts after concluding that the merger was unlikely to substantially lessen competition there.

Harvard Pilgrim is a regional health insurer based in Wellesley, Massachusetts, with approximately $3 billion in annual revenue, the vast majority coming from commercial insurance products. Health Plan Holdings is a regional insurer based in Watertown, Massachusetts, with annual revenue of more than $5.5 billion, with roughly one-third coming from commercial insurance products. Health Plan Holdings sells commercial group health insurance plans to small and large employer groups in New Hampshire through Tufts Freedom.