U.S. District Judge John Bates sent a clear message last month when he issued an order imposing an injunction on Aetna's $37 billion acquisition of Humana, which focused largely on buying up Humana's Medicare Advantage business. The judge found the merger would "be likely to substantially lessen competition" in the Medicaid Advantage market. Indeed, it would have a significant impact across Texas — and 13 other states — likely enhancing Aetna's market power to concerning levels per the federal government's own standards, according to a comprehensive American Medical Association analysis.
Aetna spokesman T.J. Crawford told U.S. New & World Report on Jan. 23 that the insurer was "reviewing the opinion now and giving serious consideration to an appeal."
Despite objections to the merger from TMA and AMA and the filing of a U.S. Department of Justice (DOJ) antitrust lawsuit to prevent the Aetna-Humana merger from going through, Aetna cited robust competition in the market and defended the consolidation as leading to greater savings, better products, and new payment models. But TMA and its physician members say any supposed merger benefits come at doctors' and patients' expense in the form of take-it-or-leave-it payment contracts and take-it-or-leave-it insurance premiums.
Physicians worry that consolidation raises insurers' leverage over negotiated rates with physician practices, more than half of which in Texas and across the nation are small groups, according to TMA and AMA research.
In TMA's October 2015 letter to DOJ opposing the Aetna-Humana deal, Joseph S. Valenti, MD, then-chair of TMA's Council on Socioeconomics, expressed concern that other dominant insurers don't benefit from the Aetna-Humana deal. In the past, medicine successfully advocated that DOJ, which oversees antitrust issues, force merging insurers to sell off some of their combined business to a third party to reduce their market power. If federal regulators follow that prescription, TMA strongly opposed any partial acquisition by large players with significant market control.
TMA's letter to DOJ cautioned, too, against anticompetitive effects in Texas' Medicare Advantage market, pointing out the newly combined entity would control 36 percent of that business across the state. The government's complaint against Aetna and Humana delves into the impact the merger would have on seniors who rely on Medicare Advantage plans. "Aetna's attempt to buy Humana undermines the central role that competition is meant to play in Medicare Advantage and on the public exchanges in holding down health care costs and improving quality for seniors, families, and individuals," DOJ wrote. "If permitted to proceed, Aetna's purchase of Humana likely would lead to higher prices and reduced benefits for seniors, families, and individuals."
In a statement on Judge Bates' order, AMA President Andrew W. Gurman, MD, said, "Aetna's strategy to eliminate head-to-head competition with rival Humana posed a clear and present threat to the quality, accessibility, and affordability of health care for millions of seniors," adding the order "acknowledged that meaningful action was needed to preserve competition and protect high-quality medical care from unprecedented market power that Aetna would acquire from the merger deal." AMA previously testified against the merger. The American Hospital Association also has been vocal in its opposition to the deal.
For more information about the merger and TMA's opposition to it, read "Bigger Isn't Always Better" in the December 2015 issue of Texas Medicine.
Action, Feb. 1, 2017