Missouri cites 'anticompetitive impact,' issues order against Aetna-Humana merger

Missouri’s Department of Insurance has issued a preliminary order against the proposed merger between Aetna and Humana, saying if the two combine, they must stop doing business in the state.

The order is the first of its kind from any state regarding the proposed $37 billion acquisition.

In department argued in the order the acquisition would have an “anticompetitive impact” on individual and small group markets, along with individual and group Medicare Advantage markets within the state.

Among its other findings:

• The insurers “failed to meet their burden” to prove the merger wouldn’t hurt competitiveness in the individual market;
• The combined market shares of the companies are well above what’s needed for “evidence of violation of the competitive standards”;
• Missouri markets have already become dominated by a few insurers, with four companies controlling more than 91 percent of the individual market;
• Aetna failed to produce evidence that “any efficiencies produced by the merger would outweigh the anticompetitive effects of the merger on Missouri”;
• Aetna’s own expert couldn’t verify the company’s efficiency claims and offered no opinion to any certainty the efficiencies would actually be accomplished.

In his conclusion, Department of Insurance Director John Huff said if Aetna takes over Humana, the companies and their subsidiaries “shall cease and desist” from doing business in the state in the individual, group and group Medicare Advantage markets. Their plans would also be kicked out of individual Medicare Advantage markets in the 33 counties where their combined market share would exceed 70 percent.

Aetna said in a statement the order won’t impede the ongoing federal approval process for the acquisition.

"We are disappointed with the Missouri order but expect to have a constructive dialogue with the state to address their concerns,” Aetna spokesperson Rohan Hutchings said to HealthExec.

Hutchings also pointed to letters submitted to the department supporting the merger from organizations such as YMCA of Greater Kansas City, the Missouri Primary Care Association and Encompass Medical Group, the largest independent practice in the Kansas City area.

“With ongoing industry change and transformation, both companies have demonstrated their dedication to advance clinical and population health projects with us and our mutual patients/enrollees. The Aetna acquisition of Humana will certainly enhance their ability to continue on that path,” wrote Ecompass CEO Dayna Hodgden on May 18.

The department also received several written statements against the acquisition from groups like the Missouri Hospital Association, the Missouri State Medical Association and the American Medical Association.

“We have concluded that this merger will likely impair access, affordability and innovation in the sell-side market for health insurance, and on the buy-side, will deprive physicians of the ability to negotiate competitive health insurer contract terms,” the AMA wrote.

The order did offer the companies 30 days to “submit a plan to remedy the anticompetitive impact of the acquisition” before the order can be finalized.