U.S. District Judge John Bates has backed the Justice Department and blocked Aetna’s proposed $37 billion takeover of Humana over antitrust concerns. Judge Bates ruled that Medicare Advantage and traditional Medicare should not be considered the same market. Therefore, the deal would violate antitrust laws as Aetna and Humana would have an “unlawful” Medicare Advantage market share in 364 counties across 21 states and that the deal would be anticompetitive in 17 counties across 3 states.
Here are five reactions collected by Becker’s Hospital Review to the ruling.
1. American Medical Association President Andrew Gurman, M.D., called the “court’s ruling … a notable legal precedent by recognizing Medicare Advantage as a separate and distinct market that does not compete with traditional Medicare. This was a view advocated by the AMA, as well as leading economists. AMA also applauds the decision for protecting competition on the public exchanges.”
2. Matthew Cantor, partner at Constantine Cannon, said he thought whether Medicare Advantage and original Medicare should be considered the same market was never “a real significant dispute.” However, in Becker’s words, “he found it interesting Judge Bates gave little weight to Aetna’s argument that its exit from ACA exchanges in the 17 complaint counties was a business decision.”
Mr. Cantor said while as a matter of law the ruling will be hard to reverse, the “most important part now is how the Trump administration is going to react to this. I would think they would be receptive and listen to what the merging parties have to say, particularly if it scores them political points on the repeal and replacement of the ACA.”
3. Randal Schultz, a partner at Lathrop & Gage and chairman of the firm’s healthcare strategic business planning practice group, said the judge’s ruling was logical and an easy decision. He said should Aetna successfully appeals the deal and if the deal does go through, he hopes that the court makes insurers “disclose financial information about the actual cost of care. By putting requirements on merged groups to release actual healthcare costs … it opens up a black box [and] people will know what it actually costs to insure a population.” Doing so would push more employers toward self-insuring their workers, he said.
Regarding the looming decision of Indianapolis-based Anthem’s proposed $54 billion acquisition of Cigna, Mr. Schultz added, “I’ll be shocked if the other case doesn’t come down the same way.”
4. Aetna spokesperson T.J. Crawford said “We’re reviewing the opinion now and giving serious consideration to an appeal after putting forward a compelling case.”
5. Aetna Chairman and CEO Mark Bertolini and Humana CEO Bruce Broussard said jointly: “After putting forward a compelling case that addressed each of the Department of Justice concerns, we are disappointed with the court’s decision and will carefully consider all available options. We continue to believe a combined company will create access to higher-quality and more affordable care, and deliver a better overall experience for those we serve.”
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