U.S. District Judge John D. Bates blocked the proposed merger deal of health care giants Aetna and Humana on Monday, saying that such a merger would violate antitrust law by significantly reducing competition in the marketplace.

“The Court concludes that the proposed merger is likely to substantially lessen competition in Medicare Advantage in all 364 complaint counties and in the public exchanges in the three complaint counties in Florida,” according to the court document.

Bates wrote that the merger is “presumptively unlawful — a conclusion that is strongly supported by direct evidence of head-to-head competition.”

Upon morning reports that the merger deal was rejected, Humana and Aetna stocks both plunged by over 2 percent, though Humana recovered to a roughly 1.4 percent loss just before noon. For the session, Humana climbed 2.2 percent, to close at $205.02; Aetna closed down 2.7 percent, to $119.20.

A Humana spokesman said the company was reviewing the ruling. An Aetna spokesperson told Bloomberg that the company is reviewing the ruling and “giving serious to consideration to an appeal.” If the merger does not go through, Humana stands to receive $1 billion from Aetna.

The American Medical Association sent out a statement in favor of the judge’s ruling, calling elderly patients “the big winners” following today’s news.

“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,” Dr. Andrew W. Gurman, president of the American Medical Association, said in the statement. “The AMA applauds the extraordinarily well documented, comprehensive, fact-based ruling of U.S. District Judge John D. Bates, which 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.”

Gorman in the statement said that the ruling sets a legal precedent by recognizing Medicare Advantage as separate from traditional Medicare.

The spokesman for Mayor Greg Fischer of Louisville — where Humana is headquartered — told IL that the mayor “is optimistic about the future of Humana, whatever the outcome of the merger. He believes Humana will continue to be a strong company and an entrepreneurial backbone for the city.”

Kentucky Gov. Matt Bevin took to Twitter to note his displeasure with the ruling.

“Disappointing news regarding the proposed Humana/Aetna merger…Temporarily blocked…Ruling likely to be appealed,” he tweeted.

Greater Louisville Inc. president and CEO Kent Oyler referred to the ruling as “a setback.”

“We know Humana and Aetna’s legal teams are reviewing the ruling and will do what’s best for both companies and their employees moving forward,” he said in a statement.

Oyler called Humana “one of the best corporate citizens in Greater Louisville” and applauded the company’s “commitment to their local workers.” He noted that Aetna similarly had committed to maintain a strong presence in Louisville if the merger went through.

Hartford, Conn.-based Aetna announced July 3, 2015 that it wanted to buy Louisville-based Humana for $37 billion. The companies said that combined they can offer better care to more customers at a lower cost. The U.S. Department of Justice disagreed and on July 21 filed a lawsuit to stop the proposed deal because government officials argued it would reduce competition, lower the quality of care and raise insurance prices, especially for older Americans.

Humana employs about 12,000 in Louisville, and while officials have said some employees likely will lose their jobs because of the merger, the net effect of the deal on Louisville could be positive. Aetna has promised to maintain a “significant corporate presence” and the headquarters of its growing Medicare and Medicaid businesses here — and the company has refused to make any public commitments toward its hometown of Hartford.

The companies have said their merger would create more than $2 billion in annual efficiencies, including hundreds of millions that would flow to consumers. However, the DOJ said the efficiencies are unlikely to reach consumers and that the merger would reduce competition and increase insurance premiums by $340 million per year.

At the heart of the lawsuit lay a disagreement among the insurers and the government about government-funded insurance for older citizens.

When signing up for Medicare, elderly Americans can choose between:

  • Original Medicare, which provides insurance for stays in health care facilities — hospitals, nursing homes, hospice — and medical services:  lab tests, surgeries and wheelchairs. OM is coverage managed by the federal government. Participants have their choice of doctors, hospitals and other providers that accept Medicare.
  • Medicare Advantage, which provides the same kind of insurance, but is provided by private insurance companies such as Aetna and Humana that are approved by Medicare. Participants on most MA plans have to use doctors, hospitals and other providers that are part of the insurance company’s network — or pay more or all of the cost if they go outside the network.

The Kaiser Family Foundation has said that Aetna and Humana combined would have a Medicare Advantage market share exceeding 50 percent in 10 states and higher than 67 percent in five states. The two companies combined would have an industry-leading 4.4 million Medicare Advantage customers, or about 25 percent of the total MA enrollment of 17.6 million, according to Kaiser.

The government argued that the merger would eliminate competition between the companies, allow them to dominate the markets, and reduce the likelihood that other companies would dare to compete with the merged company. And that would reduce the quality of services offered to older Americans and increase their costs.

However, the companies contended that the government is defining the senior citizen health care market too narrowly, in that it only focuses on Medicare Advantage — not on Medicare as a whole.

In the buildup to the trial, which began Dec. 5, the insurers and the government also traded barbs, with the government essentially blaming Aetna for not being able to make money on the health care exchanges, and Aetna leaders saying the government’s case relies on faulty economic modeling that belies “real-world facts.”

Aetna, Humana and other insurers had said they incurred losses of hundreds of millions of dollars from patients they gained through the exchanges, a central part of the Affordable Care Act, also known informally as Obamacare. The insurers said that while lots of older, sicker patients had signed up for health insurance, younger, healthier customers had stayed away. That meant that health insurance premiums the insurers collected were not enough to pay for the care that the new patients required.

Many large insurers, including Aetna, have significantly reduced their participation in the exchanges for this year, leaving many customers with fewer choices and smaller networks.

Caitlin Bowling and Joe Sonka contributed reporting. This story will be updated.