It has been a year and a half since Aetna's battle to acquire Humana began. With that amount of time and over 200 people working on integration plans, you'd think the deal would be done, right? Wrong. The major hold-up is The U.S. Justice Department, who sued in an attempt to block the merger, claiming the deal violates anti-trust laws. Several states have also filed antitrust lawsuits to block the merger, based on the following reasons:
- Reduced competition
- Inhibited innovation
- Price increases to consumers
The merger currently sits with U.S. District Judge John D. Bates in Washington, who heard final arguments on December 30th, 2016, and says he will issue his ruling "in a timely manner".
An interesting dispute in the arguments is if Medicare Advantage is in a market by itself, or if it competes with Original Medicare. If it does compete with Original Medicare, as the insurers suggest, the argument from the government that the merger would lead to a price increase would fall short. Bates left the most recent hearing unconvinced of the insurers position, pointing to evidence that they internally treat Medicare Advantage as separate from Original Medicare.
The Justice Department not only believes the merger would be harmful to seniors on Medicare Advantage, but that it would harm the Aetna members on ACA plans in Florida, Georgia, and Missouri. They believe the merger also played a part in Aetna nearly leaving the ACA market for 2017, although Aetna says those claims are unfounded.
Similar debates are going on now with Anthem, since they have also proposed a $54 billion merger with Cigna. If both mergers are successful, it would bring 5 of the largest insurance companies in the U.S. down to 3.
So, what can we take away from this while we wait for the final decision to be made? If we learned anything from the Aetna/Coventry merger back in 2013, it is that having BOTH contracts as an agent will play to your advantage. When these giant mergers start to take shape, it is hard for anyone to predict which parts of which company will remain intact. From the agent portal, customer service, and marketing materials, to plan designs, benefits, and cost, there is a lot of things for both companies to iron out before they truly become one. And, it won't happen overnight. Having a good knowledge for both is a huge advantage to you the agent, and for when your clients begin asking questions about their plans in the future.
What are your opinions on the Aetna/Humana merger? Do you think it should go through? Should the government stay out and let the companies decide as private businesses? Or would it reduce competition, and potentially harm the senior market? We would love to hear your thoughts!
Note: all Aetna and Humana plans were filed separately for 2017, and most likely will be filed separately for 2018 (and maybe even beyond), even if the merger is approved. We will keep you updated as the story progresses and the final decision is made.
(1-23-2017) Update: Merger blocked by judge: https://www.bloomberg.com/news/articles/2017-01-23/aetna-s-humana-takeover-is-blocked-by-judge-as-anticompetitive