Judge Rejects Aetna's Bid to Buy Humana

Aetna’s attempt to purchase rival insurer Humana has been thwarted by a federal judge.

The Associated Press reports that U.S. District Judge John Bates halted Aetna’s plan to purchase Humana for roughly $34 billion on Monday. Bates wrote in his opinion that such a merger would ultimately thwart competition in the insurance marketplace, the AP reports.

The AP also quotes an Aetna spokesman as saying an appeal is under “serious consideration” by the company.

Last summer, the U.S. Department of Justice filed suit to stop the Aetna-Humana merger, as well as Aetna’s attempt to acquire Cigna Corp. No decision has been filed on the Cigna acquisition, the AP reports. The DOJ had expressed concerned that the merger would take the market of five major insurers to three, driving down competition for individual Medicare Advantage plans and for policies sold on individual exchanges.

Aetna had planned to sell certain Medicare Advantage assets to Molina Healthcare to appease the court, but that proposal wasn't enough.

There would not be enough new entrants into the market to replace the competition lost to the merger, the court said in its decision. The most favorable competition analysis to the defandants put the likelihood of a new market entrant to replace lost competition at 25.5 percent. Other analyses put the estimate at as low as 10 percent.

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So, even under the most generous of the plausible calculations the median county has a 13.3% chance of experiencing any entry, and a 25.5% chance that this new entry will be sufficient to replace the lost competition," Bates wrote. "There is therefore a relatively small chance overall of replacing the competition lost by the proposed merger."

Laura Joszt of The American Journal of Managed Care contributed to this report.