Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Aetna, Humana agree to sell Medicare Advantage assets to Molina, (Aug 3, 2016)

By Linda O’Brien, J.D., LL.M.

Health insurance companies Aetna and Humana have entered into separate agreements to sell certain of their respective Medicare Advantage assets to Molina Healthcare, Inc. for a total of $117 million for both transactions, the companies announced in a joint statement yesterday. The transactions are subject to the successful completion of Aetna’s proposed acquisition of Humana.

Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 46.5 million people. Aetna offers a broad range of traditional, voluntary, and consumer health insurance products and related services. Headquartered in Louisville, Kentucky, Humana is a leading health and well-being company, serving over 13 million customers across the country. In July 2015, Aetna announced that it had agreed to acquire Humana for $37 million.

In July 2016, eight states and the District of Columbia joined the Department of Justice (DOJ) Antitrust Division in its action to stop Aetna’s attempt to buy Humana. The suit alleged that, if allowed to proceed, the acquisition by Aetna—the nation’s third-largest health-insurance company—of Humana—the fifth-largest health insurer—would allegedly enhance Aetna’s power to profit at the expense of seniors who rely on Medicare Advantage and individuals and families who rely on the public exchanges for health insurance. According to the government, the merger is presumptively unlawful in hundreds of local markets for Medicare Advantage where Aetna and Humana currently compete. In addition, Aetna’s proposed merger with Humana threatens to harm those who rely on the public exchanges to buy health insurance, particularly in Florida, Georgia, and Missouri, the government alleged. The complaint identified 17 relevant geographic markets for the sale of health insurance on the public exchanges impacted by the proposed deal in those three states.

According to the companies’ announcement, Molina is expected to gain approximately 290,000 Medicare Advantage members in 21 states as a result of the transactions. This will preserve robust competition for seniors choosing to receive Medicare coverage through Medicare Advantage plans and address a key concern of the U.S. Department of Justice in its challenge to the Aetna-Humana transaction.

"Our agreements with Molina promote competition within the large, diverse and highly regulated Medicare industry, and ensure that seniors continue to have an abundance of options when they decide how to receive Medicare coverage," said Mark T. Bertolini, Aetna chairman and CEO, and Bruce Broussard, Humana president and CEO. "We believe that these divestitures taken together would address the Department of Justice’s perceived competitive concerns regarding Medicare Advantage. We are confident in Molina’s ability to deliver continued access to quality care for our members in these areas."

Companies: Aetna, Inc.; Humana, Inc.

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