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US: Aetna, Humana face federal antitrust lawyers in court

 |  December 4, 2016

Lawyers for insurance giants Aetna and Humana will begin battling government antitrust lawyers Monday in a Washington, DC court, seeking to get legal clearance to complete their planned $37 billion merger.

Worried that the deal would raise prices and lower benefits for customers, the Department of Justice, eight states and the District of Columbia sued to block the deal. The outcome of the trial, to be presided by US District Judge John Bates, could have significant ramifications on how seniors buy Medicare and the insurance options available to individuals who are not reliant on employer coverage. If the deal falls through, Humana could get a $1 billion in breakup fee from Aetna.

The legal fight is unfolding at a time when federal regulators are showing greater concern for the consolidation in the health insurance market. The DoJ also is in the midst of a trial to block Anthem’s deal to buy Cigna for $54 billion. Those two insurers cover about 17% of the US population and regulators argue that consolidation of the market for private health insurance for employers and individuals would lessen competition, harming consumers, doctors and hospitals.

Aetna CEO Mark Bertolini, anticipating the antitrust scrutiny, told the DoJ on July 5 in a letter that blocking the deal “would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support” of Obamacare.

After the DoJ filed its lawsuit, Aetna followed through and announced in August its intention to withdraw its participation in 11 of its 15 state Obamacare exchanges in 2017.

The DoJ says the company’s move shouldn’t be factored in the court’s interpretation of the merger’s competitive effects on Obamacare markets. “The court should not allow Aetna to avoid antitrust scrutiny by essentially shuttering its factory,” it says.

Aetna’s Bertolini says its withdrawal from the public-exchange business is related more to financial considerations. The company has been operating it “at a substantial loss,” he says.


Full Content: USA Today

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