Judges nix deal

Insurer chose to drop 17 counties

There will be no merger between Aetna and Humana, a federal court has ruled.

Aetna wasn’t losing money selling Obamacare plans in Florida after all, according to a federal court ruling blocking the insurer’s proposed $37 billion merger with Humana.

Aetna withdrew last August from Obamacare markets in Florida, including Broward and Palm Beach counties, along with hundreds of other counties nationwide, saying it was suffering heavy losses.

But in his 158-page ruling blocking the merger, U.S. District Judge John Bates cited evidence that the company was profitable in Florida and that it withdrew from three Florida counties and 14 others in Georgia and Missouri to evade judicial scrutiny of the government’s charge that a merger would harm competition in the 17 counties.

The company had developed a list of hundreds of counties where it was losing money and planned to leave, but added the 17 others only after they were identified in a federal court complaint as most in danger for loss of competition that would result from a merger, Bates found.

Broward was also among 364 counties in 21 states where Aetna and Humana were both selling Medicare Advantage plans that also stood to suffer from the loss of competition, the government argued.

The lawsuit seeking to block the merger — and naming the at-risk counties — was filed on July 21 by attorneys general of the United States, the District of Columbia and eight individual states, including Florida.

On Aug. 15, Aetna announced it would reduce the number of counties where it would sell Obamacare plans in 2017, from 778 to 242 in four states — Delaware, Iowa, Nebraska and Virginia. In a public statement, the company said the decision followed “a thorough business review” in light of total pretax losses of more than $430 million since January 2014 in its Affordable Care Act insurance pool.

In its defense against the government’s argument that the merger would create unlawful concentration within 17 counties’ Obamacare markets, Aetna and Humana argued “that there is no competition ... because Aetna has decided not to compete in those counties in 2017,” Bates wrote.

But in his ruling, Bates found “that Aetna withdrew from competing in the 17 ... counties for 2017 specifically to evade judicial scrutiny of the merger.” Emails between Aetna executives showed they decided to withdraw from the 17 counties after determining that Humana planned to remain in them, then tried to “conceal from discovery in this litigation the reasoning behind their recommendation to withdraw” from the 17 counties, Bates wrote.

Bates’ ruling, filed on Jan. 23, disputed Aetna’s claim it was losing money in Florida and predicted the company would return to the health insurance exchange in Broward, Palm Beach and Volusia counties after 2018. “Florida’s on-exchange markets were profitable for Aetna in 2015 and were projected to be in 2016,” Bates wrote.

Aetna’s Florida market president Christopher Ciano, who was not involved in the decision, is quoted in the ruling in an Aug. 4 email saying, “I just can’t make sense out of the Florida decision ... Never thought we would pull the plug all together. Based on the latest run rate data ... we are making money from the on-exchange business.”

“Ciano’s reaction to Aetna’s decision underscores that it was not a business decision,” Bates wrote.

Aetna’s withdrawal from Florida, combined with pullouts of Cigna and UnitedHealthcare, left Broward, Palm Beach and MiamiDade counties with just four competing Obamacare insurers in 2017.