Consumers win as federal court decision enjoins Aetna Humana merger
News: 2017 Press Release
SACRAMENTO, Calif. - Insurance Commissioner Dave Jones applauds today's decision by the U.S. District Court for the District of Columbia to issue an injunction blocking the proposed merger of Aetna, Inc. and Humana, Inc.
The Court found the merger would substantially lessen competition for Medicare Advantage plans, as well as substantially lessen competition on the Florida exchange. The Court also found any efficiencies resulting from the proposed merger are not sufficient to mitigate the anti-competitive effects for consumers.
Significantly, the Court also found Aetna's withdrawal from the public exchanges in 17 counties across three states was done to avoid antitrust scrutiny, rather than for business reasons.
"One thing we know for sure—consumers do not benefit when there are fewer choices and a lack of competition," said Insurance Commissioner Dave Jones. "The Aetna and Humana merger has anti-competitive impacts that will likely result in increased prices, decreased availability of health insurance products, and decreased quality and access to health care. Even before the proposed merger, Aetna had a track record of excessive rate increases on small businesses in California."
The Court's decision is consistent with the June 23, 2016 letter from Insurance Commissioner Jones to the U.S. Department of Justice in which he conveyed his finding that the proposed merger of Aetna and Humana was anti-competitive. Commissioner Jones held a public hearing in April 2016 regarding the Aetna-Humana proposed merger, and found it would reduce competition in an already heavily concentrated commercial health insurance markets in California and across the nation. Jones' findings also included the negative impact on the millions of seniors nationally who rely on Medicare Advantage. A merged Aetna-Humana would have had 26 percent of all Medicare Advantage enrollees in the country, more than any other insurer.
The proposed Aetna-Humana merger would have combined the third and fifth largest health insurers by market value, in a setting where the second and fourth largest health insurers by market value (Anthem and Cigna) are also seeking to merge. Jones concluded that the market concentration in California and in other markets resulting from the Aetna and Humana merger would damage access, quality, and affordability for consumers.
"The Aetna merger with Humana would permanently remove one of the nation's largest health insurers from the market and further reduce competition," Jones continued. "With regard to the Aetna-Humana merger, once again, bigger is not better for consumers, businesses, or health insurance markets."
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- The June 23, 2016 letter from Commissioner Jones to the U.S. Dept. of Justice can be found here.
- The January 23, 2017 Memorandum Opinion of the U.S. District Court can be found here .
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.