Aetna starts bid to sal­vage Hu­mana deal

The Denver Post - - BUSINESS - By Bloomberg News

Aetna Inc.’s pro­posal to sal­vage its $37 bil­lion takeover of Hu­mana Inc. by sell­ing as­sets to a smaller com­pany isn’t con­vinc­ing the Jus­tice Depart­ment, which told a fed­eral judge that the rem­edy poses risks for se­niors who de­pend on Medi­care.

The in­surer that Aetna wants to sell as­sets to, Molina Health­care Inc., is un­likely to re­place the com­pe­ti­tion that would be lost from the merger, Jus­tice Depart­ment lawyer Craig Con­rath said Mon­day as a U.S. an­titrust trial seek­ing to block Aetna’s ac­qui­si­tion of Hu­mana kicked off in Wash­ing­ton.

“Molina would be no Aetna or Hu­mana,” Con­rath told U.S. Dis­trict Judge John D. Bates. “It’s the con­sumers — se­niors — who face the risk.”

The Jus­tice Depart­ment sued Hu­mana and Aetna in July, the same day it filed a com­plaint seek­ing to halt An­them Inc.’s $48 bil­lion ac­qui­si­tion of Cigna Corp. The an­titrust law­suits are aimed at pre­vent­ing con­cen­tra­tion among the big­gest U.S. health in­sur­ers and pro­tect com­pe­ti­tion in an in­dus­try that Pres­i­dent Barack Obama re­shaped with the 2010 Pa­tient Pro­tec­tion and Af­ford­able Care Act.

The gov­ern­ment ar­gues the Aetna-Hu­mana deal would elim­i­nate com­pe­ti­tion be­tween the in­sur­ers in 364 coun­ties in 21 states and likely force se­niors to pay higher pre­mi­ums for Medi­care Ad­van­tage, the gov­ern­ment-sub­si­dized in­sur­ance pro­gram for the el­derly.

The Jus­tice Depart­ment says any at­tempt to re­store com­pe­ti­tion by Molina’s en­try fails be­cause Molina wasn’t suc­cess­ful in its pre­vi­ous foray into the Medi­care mar­ket. It once of­fered Medi­care Ad­van­tage plans in 63 coun­ties and now of­fers plans that en­roll only 424 peo­ple, the gov­ern­ment said.

Aetna coun­ters that the Medi­care mar­ket is much larger than the Jus­tice Depart­ment claims be­cause it in­cludes both Medi­care Ad­van­tage plans and orig­i­nal Medi­care. By fo­cus­ing just on Medi­care Ad­van­tage, the gov­ern­ment is por­tray­ing the com­pet­i­tive ef­fects of the deal as worse than they re­ally would be.

Even if the mar­kets were sep­a­rate, Aetna says the as­set sale to Molina, with rev­enue of $14 bil­lion in 2015, would es­tab­lish a ro­bust com­peti­tor against a com­bined Aetna and Hu­mana.

The other mar­ket at is­sue in the law­suit is the pub­lic ex­changes es­tab­lished by Oba­macare where in­di­vid­u­als buy in­sur­ance. Aetna in Au­gust an­nounced it would stop sell­ing Oba­macare cov­er­age in 11 of the 15 states in which it par­tic­i­pated in the pro­gram, in­clud­ing all 17 of the Florida, Ge­or­gia and Mis­souri coun­ties where the U.S. has claimed its merger with Hu­mana would de­crease com­pe­ti­tion.

The U.S. ar­gues that Aetna’s with­drawal was aimed at un­der­min­ing the gov­ern­ment’s case and said that noth­ing pre­vents Aetna from re-en­ter­ing those mar­kets af­ter sit­ting out a year.

“The court shouldn’t look at the closed sign, but at the store be­hind it,” Con­rath said.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.