The US District Court for the District of Columbia has blocked the Aetna-Humana merger on the grounds it is anticompetitive.
The US District Court for the District of Columbia has blocked the Aetna-Humana merger. According to the decision, the efficiencies gained through the merger would not be enough “to mitigate the anticompetitive effects for consumers in the challenged markets.”
In July 2016, the Department of Justice (DOJ) filed an antitrust lawsuit to prevent both the Aetna-Humana merger and the Anthem-Cigna merger. The DOJ had been concerned that the 2 mergers, which would reduce the market from 5 big insurers to just 3, would lessen competition for individual Medicare Advantage plans and for insurance sold on the individual exchanges. After hearing arguments and reviewing the evidence, the court agrees.
Even the plan to save the merger through Aetna and Humana selling off certain Medicare Advantage assets to Molina Healthcare was not enough to appease the court.
According to the court's decision, new entrants into the market would not be sufficient to replace the competition lost by the merger. In the analysis most favorable to the defendants, there was only a 25.5% chance new entrants would make up for the lost competition, and that number could drop as low as 10%.
"So, even under the most generous of the plausible calculations the median county has a 13.3% chance of experiencing any entry, and a 25.5% chance that this new entry will be sufficient to replace the lost competition," US District Judge John D. Bates, wrote. "There is therefore a relatively small chance overall of replacing the competition lost by the proposed merger."
Aetna's spokesman, TJ Crawford, told Bloomberg that the company is reviewing the opinion and will consider appealing.
More on this story as it develops.