U.S. Court Blocks Aetna's Acquisition Of Humana

(RTTNews) - Judge John D. Bates of the District Court for the District of Columbia issued a decision today that found in favor of the Justice Department in its civil antitrust lawsuit to block health insurer Aetna Inc.'s (AET) acquisition of rival insurer Humana Inc, the U.S. Justice Department said.

"Today's decision is a victory for American consumers - especially seniors and working families and individuals," said Deputy Assistant Attorney General Brent Snyder, who is currently heading the Justice Department's Antitrust Division.

"... This merger would have stifled competition and led to higher prices and lower quality health insurance. Aetna attempted to buy a formidable rival, Humana, instead of competing independently to win customers. Millions of consumers have benefited from competition between Aetna and Humana, and will continue to benefit because of today's decision to block this merger," said Brent Snyder.

Brent Snyder noted that the court's decision will save customers and taxpayers up to $500 million per year. The Justice Department and state partners brought this case because substantial evidence showed that direct competition between Aetna and Humana led the companies to offer more generous benefits at lower prices.

Today's decision follows a 13-day trial in December 2016. In July 2016, the Justice Department along with eight states and the District of Columbia sued to stop the merger. The complaint alleged that a combined Aetna and Humana would substantially reduce competition for the sale of Medicare Advantage - a form of Medicare coverage provided by private insurers -and health insurance to individuals through the public exchanges.

In blocking the transaction, the court ruled that the proposed merger is likely to substantially lessen competition in the sale of individual Medicare Advantage plans in 364 counties. The court ruled that the sale of Medicare Advantage is a relevant antitrust product market, meaning that competition among Medicare Advantage providers is protected by the antitrust laws.

In addition, the court rejected Aetna and Humana's claim that their proposal to divest 290,000 Medicare Advantage customers to Molina Healthcare, a health insurer, would prevent the competitive harm that the merger would produce.

The court further found that Aetna withdrew from the individual public exchanges in three states to evade judicial scrutiny of the proposed merger. The court concluded that the proposed merger would have caused a substantial lessening of competition in three counties in Florida.

It was in July 2015 that health insurers Aetna agreed to acquire Humana in $37 billion cash and stock deal