In­sur­ance in­dus­try awaits merger rul­ings

Modern Healthcare - - THE WEEK AHEAD - —Shan­non Much­more

The fu­ture of the health in­sur­ance mar­ket may be­come clearer as tri­als on two ma­jor merg­ers wind down.

An­them is propos­ing a $54.2 bil­lion takeover of Cigna Corp. while Aetna is at­tempt­ing a $37 bil­lion merger with Hu­mana. The govern­ment has sued to stop both deals, ar­gu­ing com­pe­ti­tion would be re­duced, re­sult­ing in higher prices, lower qual­ity care and fewer choices for con­sumers. An­them main­tains that its takeover of Cigna would lead to more in­no­va­tive care models and lower costs for pa­tients.

Tim Gre­aney, co-di­rec­tor of the Cen­ter for Health Law Stud­ies at St. Louis Univer­sity, said the govern­ment has done a good job of mak­ing its core ar­gu­ment in the An­them trial and has sewn doubt that the in­sur­ers’ could pro­vide bet­ter and less ex­pen­sive ser­vices by work­ing to­gether, as both claim.

A source with An­them, speak­ing on back­ground, said he thought the rul­ing could go ei­ther way.

Whether Medi­care Ad­van­tage com­petes with Medi­care’s tra­di­tional fee-for-ser­vice pro­gram is the big ques­tion in the Aetna trial. The govern­ment main­tains that the two are sep­a­rate mar­kets while Aetna lawyers ar­gue that the CMS reg­u­lates them as func­tional sub­sti­tutes.

The judge for that trial, U.S. Dis­trict Judge John Bates, must at­tempt to pre­dict the fu­ture of the mar­kets as he con­sid­ers his rul­ing. If the judge rules against the in­sur­ance com­pa­nies, they will have to de­cide whether to ap­peal the de­ci­sion or at­tempt to work with the new ad­min­is­tra­tion of Pres­i­dent-elect Don­ald Trump.

Cigna and Hu­mana would re­ceive pay­ments if their re­spec­tive merg­ers fall through. Aetna would pay Hu­mana $1 bil­lion and Cigna would get $1.85 bil­lion from An­them.

Whether Medi­care Ad­van­tage com­petes with Medi­care’s tra­di­tional fee-for-ser­vice pro­gram is the big ques­tion in the Aetna trial.

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