What does the major ruling in the Aetna-Humana case on Monday mean for healthcare IT leaders? In a word, uncertainty—uncertainty in business contracting that could affect planning around risk contracting and population health initiatives trickier than ever before.
Let’s look at the circumstances of the federal court ruling on Monday, when a federal judge blocked the a proposed mega-merger, between the Hartford-based Aetna and the Louisville-based Humana, two of the powerhouse health insurers in the U.S. As Managing Editor Rajiv Leventhal noted in his news story posted shortly after the news broke, the merger agreement, in which Aetna proposed to buy Humana for $37 billion, has been ruled anticompetitive by US District Judge John Bates. A report in Bloomberg Markets on Monday morning reported, in referencing the health insurers’ assertions that their merger would not be anticompetitive, that “Bates sided with the government, writing that data showed there are seniors who prefer Medicare Advantage and would be unlikely to switch to original Medicare if prices for Medicare Advantage plans rose."
The Bloomberg Markets story continued, "The head-to-head competition between Aetna and Humana benefits these seniors with broader networks and lower costs, Bates said. The companies’ proposal to restore competition by selling assets to Molina [a separate health insurer, based in Southern California] was insufficient, the judge said. And it quoted Judge Bates as writing that “The companies’ rebuttal arguments are unpersuasive: Federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits, and neither entry by new competitors nor the proposed divestiture to Molina would suffice to replace competition eliminated by the merger.”
The Washington Post’s article on the ruling noted that “Bates wrote in his opinion that the proposed merger would have decreased competition substantially in the Medicare Advantage market in 364 counties. Aetna and Humana had argued that Medicare Advantage plans also competed against traditional Medicare options, but the judge sided with the Justice Department that the private Medicare plans were a separate market. The companies also proposed that divesting some of that business to a smaller insurer, Molina Healthcare, could have addressed those concerns, but the judge did not agree.”
The Post’s story, by The merger was also deemed to lessen competition in the exchanges set up by the ACA in three Florida counties. Aetna withdrew from the majority of the exchanges that it had participated in this year, citing financial losses. The judge, however, wrote that Aetna withdrew from 17 counties highlighted in the case "specifically to evade judicial scrutiny of the merger."
What’s more, as the Bloomberg story noted, “Reuters last week reported that another healthcare tie-up, the Anthem-Cigna megamerger, would be blocked by a federal judge. Former Attorney General Loretta Lynch argued in July when the suit was brought that both the Anthem-Cigna merger and the Aetna-Humana merger would hurt consumer choice and increase prices.” Reuters had quoted former Attorney General Lynch as saying that "not only would the bank accounts of the American people suffer, but the American people themselves." Of course, with a change in administration, it is possible that the overall landscape around how federal authorities might treat antitrust issues in the healthcare world, and in particular in the health insurance world, could shift quickly.
The Reuters article reported on Jan. 19 that “A federal judge is expected to block a proposed deal between health insurer Anthem Inc (ANTM.N) and Cigna Corp (CI.N) as soon as Thursday, the New York Post reported, citing sources. Anthem, which operates Blue Cross Blue Shield health insurance plans in 14 U.S. states, is trying to buy smaller rival Cigna. The government sued seven months ago to stop the deal, saying it was anti-competitive. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia has not yet issued an opinion on the case,” the Reuters story noted. “The trial began late last year, and Cigna said it ended on Jan. 4.”
Looking at the bigger picture—and seeing business instability