Health insurers Aetna and Humana plan to sell $117 million worth of assets to a small competitor to help quell federal regulators’ concerns that their proposed merger would severely reduce competition.
The companies said in a joint statement today that they had reached agreements to sell Medicare Advantage assets, including 290,000 customers in 21 states, to Molina Healthcare, a Long Beach, Calif.-based Fortune 500 company.
Aetna, based in Hartford, Conn., announced last summer that it wants to buy Louisville-based rival Humana for $37 billion. However, federal antitrust regulators on July 21 filed a lawsuit to block the deal, saying it would reduce competition, lower the quality of care and harm Americans across the country, especially seniors on Medicare, the government insurance program for the elderly.
Aetna and Humana said in a joint statement today that they believe the asset sale to Molina would “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.”
“We believe that these divestitures taken together would address the (DoJ’s) perceived competitive concerns regarding Medicare Advantage,” said the companies’ CEOs Mark Bertolini and Bruce Broussard.
Whether the DoJ agrees with the chief executives’ assessment is unclear. The department told IL via email that it declined to comment on the announcement.
When the feds announced the lawsuits to block the health care mergers — Anthem also wants to acquire Cigna — their comments indicated that the regulators and the companies were far apart on what needs to happen to get the deal approved.
William Baer, the DoJ’s principal deputy associate attorney general, said in a press conference at the time that the companies’ divestiture proposals were “incomplete and impractical” and “totally unlikely to solve the competitive problems we have identified.”
“There are some mergers which can be solved through divestitures,” he said. “We’ve seen nothing to suggest that these can.”
If the regulators and the companies cannot reach an agreement, the case could be litigated in court — unless the companies drop their merger plans.
Bertolini and Broussard said in their statement today that they look forward to making their case in court.
“The facts will show that our combination will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers,” the CEOs said.
Meanwhile, Molina said in a press release that the acquisition of the assets would provide it with “greater program and geographic diversity” and allow it to expand its Medicare footprint.
“We view this as an exceptional opportunity to significantly expand our health plan product portfolio in new and existing geographies, while maintaining our commitment to government-sponsored programs,” said Dr. J. Mario Molina, the company’s CEO.
Molina Healthcare last year generated revenues of $3.8 billion. Aetna and Humana’s annual revenues combined exceed $110 billion.