Newsletter

The Obama Justice Department frustrated a slew of mega-mergers amid a wave of record deal-making, including Comcast Corp.’s attempted takeover of Time Warner Cable Inc., Halliburton Co.’s deal for Baker Hughes Inc. and AT&T Inc.’s bid for T-Mobile US Inc. The Trump administration is taking over investigations into AT&T’s deal for Time Warner Inc. and Bayer AG’s proposed combination with Monsanto Co.

The government case against the merger focused on the market for private health plans for the elderly, known as Medicare Advantage. The U.S. argued the Aetna-Humana deal would have eliminated competition between the insurers in 364 counties in 21 states and likely forced seniors to pay higher premiums for Medicare Advantage plans. It also threatened competition on the insurance exchanges set up under Obamacare, the Justice Department said.

Aetna countered that the Medicare market is much larger than the Justice Department claims because it includes both Medicare Advantage plans and original Medicare, providing more choice for seniors than the government portrayed. Competition on the exchanges isn’t an issue, they said, because Aetna withdrew from all 17 counties at issue in the government’s case.

The judge sided with the government’s view of the Medicare Advantage market. “In that market, which is the primary focus of this case, the merger is presumptively unlawful—a conclusion that is strongly supported by direct evidence of head-to head competition as well. The companies’ rebuttal arguments are not persuasive,” Bates wrote.

Our Comments

Although we’re not aware of any comments by the Trump administration on this case, it appears that both the Aetna-Humana acquisitions and Anthem-CIGNA mergers are dead.  We had previously thought and reported that the Aetna-Humana acquisition had a reasonably good chance to be approved but that the Anthem-CIGNA merger had virtually no chance of approval.

Aetna had previously announced that it would sell a number of assets to Molina, contingent upon successful conclusion of the court case.  While details were never published, this apparently primarily involved selling a number of Coventry Medicare Advantage plans to Molina, and this will not happen unless the Aetna-Humana acquisition is approved.

We will continue to update readers on developments but for now this means business as usual for each of the carriers involved in the proposed acquisitions.  Aetna, Humana, Anthem and CIGNA will continue to operate as independent companies and there will be no affect on Affordable Care Act plans, Medicare Advantage plans, and plan selections for calendar year 2017.

One of the possibilities previously mentioned was that if one or both of these acquisitions failed that either or both Molina or Centene  (Ambetter is one of the companies owned by Centene), which are much smaller companies than Humana or CIGNA could be candidates for acquisition.  Earlier speculation was that Molina would be more amenable to an acquisition than Centene, but both companies have been expanding both their Affordable Care Act and Medicare Advantage plans.