U.S. blocks health insurer Aetna’s $34 bln Humana acquisition

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By Diane Bartz

<span class="articleLocation”>A U.S. judge blocked on Monday health insurer
Aetna Inc’s proposed $34 billion acquisition of smaller
peer Humana Inc, raising the stakes for rival Anthem Inc as it battles to clear a $54 billion deal to buy Cigna
Corp.

The ruling is the latest sign of antitrust authorities
having grown more assertive under U.S. President Barack Obama,
whose term ended last week. His successor, Donald Trump, and a
Republican party-controlled legislature are seeking to undo much
of the Affordable Care Act, better known as Obamacare, that
reshaped the U.S. healthcare industry, including insurance
practices.

The U.S. Justice Department had filed a lawsuit last July to
block Aetna’s acquisition of Humana and Anthem’s acquisition of
Cigna, arguing that the two deals would lead to higher prices.
Anthem and Cigna are now also waiting for a judge to rule on
whether their merger can proceed.

Judge John Bates of the U.S. District Court for the District
of Columbia said the proposed deal would “substantially lessen
competition” in the sale of Medicare Advantage plans in 364
counties in 21 states that the Justice Department identified in
their complaint, and in individual insurance markets on the
Obamacare exchange in three Florida counties. Aetna said it was
considering an appeal.

Bates dismissed Aetna’s argument that there was plenty of
choice for consumers because Medicare Advantage, which is
managed by insurance companies, competes with traditional
Medicare for the elderly and disabled, which is managed by the
government.

“In that (Medicare Advantage) market, which is the primary
focus of this case, the merger is presumptively unlawful – a
conclusion that is strongly supported by direct evidence of
head-to-head competition as well. The companies’ rebuttal
arguments are not persuasive,” Bates wrote in a 158-page
decision.

Aetna’s share price was down 2.3 percent, falling to $119.
Humana’s shares were flat at midday, trading about $200.

“We’re reviewing the opinion now and giving serious
consideration to an appeal after putting forward a compelling
case,” Aetna spokesman T.J. Crawford said.

Humana is the second-largest Medicare Advantage insurer
while Aetna is the fourth, and the two compete in more than 600
counties, the government said in its complaint.

Obama’s healthcare reform created online exchanges where
consumers can shop for individual health insurance and get
subsidies.

Doctors and hospitals had urged the Justice Department to
try to block the deal, and some large employers also opposed the
combination. (Additional reporting by Caroline Humer and Carl O’Donnell in
New York)



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