Judge blocks $37B Aetna, Humana deal — 6 things to know

Judge John Bates of the U.S. District Court ruled in favor of the Department of Justice and blocked the proposed Aetna and Humana deal, as outlined in a memorandum opinion issued by Judge Bates on behalf of the United States District Court for the District of Columbia.

Here are six things to know:

1. Throughout the antitrust trial, a primary issue concerned whether the Medicare Advantage market is completely separate from the original Medicare marketplace. DOJ attorneys said the two operate distinctly from one other as many seniors pursue MA plans due to their less costly nature.

2. Aetna and Humana attorneys said the Medicare Advantage market and original Medicare market are alternatives and seniors can freely move between them.

3. In a 156-page opinion, Judge Bates ruled the deal would significantly reduce competition in the Medicare Advantage market in 364 complaint counties and three complaint counties in Florida.

In the opinion, Judge Bates wrote, "Aetna and Humana compete in a Medicare Advantage product market that does not include Original Medicare, as both contemporary business documents and econometric evidence confirm. In that market, which is the primary focus of this case, the merger is presumptively unlawful—a conclusion that is strongly supported by direct evidence of head-to-head competition as well. The companies' rebuttal arguments are not persuasive."

4. Judge Bates also wrote Aetna exited 17 ACA exchanges for 2017 to avoid judicial scrutiny of the merger. Based on the payer's decision, Judge Bates rules the payer is likely to offer plans in the three Florida complaint counties and that the deal would be "likely to substantially lessen competition in those counties."

5. As per the deal's terms, Aetna is set to pay Humana a $1 billion breakup fee, Bloomberg reports.

An Aetna spokesperson told Bloomberg, "We’re reviewing the opinion now and giving serious to consideration to an appeal after putting forward a compelling case." A Humana spokesman did not immediately respond to Bloomberg for a comment on the matter.

6. In a statement, the American Medical Association said Judge Bates' decision to block the deal is a win for elderly patients.

AMA President Andrew W. Gurman, MD, wrote, "The court ruling halts Aetna's bid to become the nation's largest seller of Medicare Advantage plans and preserves the benefits of health insurer competition for a vulnerable population of seniors... 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."

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