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US judge blocks $37bn merger between health insurers Aetna and Humana

IBR Staff Writer Published 24 January 2017

A US federal judge has blocked Aetna's proposed acquisition of Humana, on antitrust grounds.

Judge John Bates of The US District Court for the District of Columbia said the proposed merger deal would substantially decrease competition in his verdict.

According to the court judgment, the merger would affect competition in Medicare Advantage across all 364 complaint counties as well as in the public exchanges in the three complaint Florida counties.

The judgment read: “Aetna and Humana compete in a Medicare Advantage product market that does not include Original Medicare, as both contemporary business documents and econometric evidence confirm. In that market, which is the primary focus of this case, the merger is presumptively unlawful—a conclusion that is strongly supported by direct evidence of head-to-head competition as well.”

Aetna is looking to appeal the judge’s ruling to save its merger deal, reported CNBC.

The court noted that Humana was one of the largest insurers of Medicare Advantage in 2016 while Atena took its Medicare Advantage plans to 640 new counties.

Their combination along with another $54bn merger between rival health insurance providers Cigna and Anthem could potentially raise prices for Medicare as per the class suit.

Following the announcement of the definitive agreement between Aetna and Humana in July 2015, antitrust regulators had been trying to block the merger deal.

They were reportedly concerned about the reduction in competition in the health insurance industry if the merger deal got through.

After an investigation into the proposed merger deal, the Department of Justice along with eight states as well as the District of Columbia had filed a class suit against it, alleging that it had violated the competition law.

Image: Aetna headquarters in Hartford, Connecticut. Photo: courtesy of grendel|khan and Wikipedia.