FEDERAL COURT BLOCKS AETNA-HUMANA MERGER

In a 156 page, strongly worded opinion issued on January 23, 2017, a federal district court judge for the District of Columbia blocked the $37 billion merger between Aetna and Humana, largely agreeing with the government that the merger “would be likely to substantially lessen competition in markets for individual Medicare Advantage plans and health insurance sold on the public exchanges.”  Specifically, the Court found that Medicare Advantage and Medicare are separate markets and that “the merger would likely substantially lessen competition in the market for individual Medicare Advantage” in 364 counties.  In so ruling, the Court found that “federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits,” and that neither entry by new competitors or divestiture as proposed by the companies would “suffice to replace competition eliminated by the merger.”

The Court also found that the merger would be “likely to substantially lessen competition on the public exchanges in three Florida counties.”  In so ruling, the Court noted that Aetna’s withdrawal from the exchange markets in certain counties “was to avoid antitrust scrutiny.”

Lastly, the Court rejected the companies’ arguments that efficiencies generated by the merger would be sufficient to mitigate the anticompetitive effects for consumers.

To view a copy of the Opinion, please visit here.