- Yesterday, the Center for American Progress announced a new analysis on how the pending Aetna/Humana merger would likely impact the Medicare Advantage market.
- The center's research found premiums for individual Medicare Advantage plans are lower in counties where both companies currently compete than in those where they don't.
- As a result, the analysis concludes if the merger is approved and completed, the loss of that competition between the two is likely to result in higher premiums for seniors, further consolidation in insurance markets, and increased costs to the Medicare program and taxpayers.
Given speculation that any deal between Aetna and Humana is likely to require them to divest, the CAP researchers focus on why divestitures are an insufficient solution for the problem of maintaining competition, with a particular eye to the 2012 merger between Humana and Arcadian Management Services.
"Past mergers demonstrate that they are an ineffective tool to preserve competition in Medicare Advantage markets," they wrote, because those who acquire the divested plans tend to leave the area soon after, and premiums have been seen to increase.
"When reviewing the proposed merger, the Department of Justice should ask itself why divestitures would be a successful remedy in this case when they have so clearly failed in the past," the authors argue.
They add that among other issues, if divestitures were to be attempted, they would have to be on a much larger scale than in previous mergers and there may not be any viable such competitors to divest to.