Aetna argues federal case against Humana merger based on ‘pretend world’

The antitrust trial on Aetna’s proposed $37 billion acquisition of Humana began Dec. 5, with the U.S. Department of Justice (DOJ) making its case that the merger would reduce competition and raise prices for patients and hospitals.

DOJ attorney Craig Conrath repeated the argument made by the agency when its lawsuit was filed in July. The combined insurer would control too great a share of the Medicare Advantage (MA) market, he said, with the result being higher premiums for seniors. Conrath also argued the deal would limit competition on the Affordable Care Act (ACA) exchanges.

Aetna attorney John Majoras countered by pointing out both companies have withdrawn from most state exchanges thanks to financial losses, arguing the DOJ is complaining about “a pretend world, one that does not exist anymore.”

As for the MA argument, Majoras said those plans will have a competitor in traditional Medicare and Aetna has planned to sell $100 million in MA assets to Molina Healthcare, which the DOJ has considered to be insufficient to address antitrust concerns.

“This isn’t some feeble company, as the government would like to present,” Majoras said.

The American Medical Association (AMA) has come out strongly against the merger, saying the combined company would be “an insurance Goliath” with the ability to unilaterally raise premiums, lower plan quality and narrow networks thanks to its market power.

“Aetna’s prediction that the merger would create efficiencies and lower health care costs is mere speculation,” AMA President Andrew Gurman said in a statement. “Facing little if any competition, dominant health insurers lack the incentive to pass along any cost savings in the form of lower premiums. On the contrary, research shows that health insurer mergers actually result in higher premiums. In effect, the costly process of merging two giant health insurers is borne on the backs of consumers.”

The timeline of a court decision is critical to whether the deal will survive. The merger agreement between Aetna and Humana is set to expire on Dec. 31, at which point Humana could opt out and collect a $1 billion break-up fee. It’s why Aetna wanted a trial beginning in October, but U.S. District Court Judge John Bates said the proceedings wouldn’t wrap up until Dec. 21, with a decision not expected until January—after the merger agreement deadline.

The trial is running alongside a separate antitrust case against Anthem’s proposed $54 billion acquisition of Cigna, which began Nov. 21

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John Gregory, Senior Writer

John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.

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