Aetna meets with Justice
Department over merger with Humana
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[July 09, 2016]
By Caroline Humer and Diane Bartz
NEW YORK/WASHINGTON (Reuters) - Aetna Inc
<AET.N> executives met with top Justice Department antitrust officials
on Friday to convince the government that asset sales it proposed would
address potential competitive problems that could threaten its deal to
buy rival Humana Inc <HUM.N>, according to a source familiar with the
Aetna's plan to buy Humana would combine two of the largest providers of
Medicare Advantage plans for elderly people, and investors are concerned
that antitrust regulators could oppose the deal.
The Justice Department's Antitrust Division is assessing both Aetna's
$34 billion merger as well as Anthem's <ANTM.N> $44 billion deal to buy
rival Cigna <CI.N>. The two mergers, if they close, would reduce the
number of big, national health insurance companies from five to three.
In the meeting on Friday, Aetna argued that asset sales it was proposing
would fix any potential competition problems that the deal creates, the
source said, adding that major players were interested in acquiring
them. The source did not specify which assets were on the chopping
block. Reuters reported last week that Aetna had begun the process of
auctioning off about $1 billion of Medicare Advantage assets to address
Before the meeting, the Justice Department had significant concerns
about the deal, Reuters reported on Thursday. It was not known if
antitrust enforcers planned to file a complaint to stop the deal or
would accept the divestiture package and allow the deal to go forward.
In the review, antitrust regulators are focused on whether the deal
would limit consumer choices for Medicare Advantage health plans for the
elderly, a separate source familiar with the matter said.
Aetna has argued that Medicare Advantage competes not just with other
Medicare Advantage plans but with traditional Medicare, which is managed
by the government with data showing consumers switch between them. The
Justice Department has previously disagreed with that approach,
according to antitrust experts.
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A trader points up at a display on the floor of the New York Stock
Exchange August 20, 2012. REUTERS/Brendan McDermid
Consumers Union, Consumer Federation of America, Consumer Action, Families USA,
U.S. PIRG, and Consumer Watchdog issued a white paper on Thursday which argued
that divestitures could not counter the harm done by the two massive mergers, at
least partially because it would be contracts rather than solid assets that are
"In the next open season, it is all too easy for the merged firm to solicit and
secure former policyholders, thus recreating the original conditions and
eviscerating the remedy," the groups said.
Aetna has said that the acquisition will help it achieve scale that can drive
down medical costs as well as provide better value-based care for consumers.
That has become increasingly important because of President Barack Obama's
national healthcare reform law, which has focused on cutting health costs.
(Editing by Bernard Orr)
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