- Missouri insurance regulators released a preliminary order late Tuesday to block the controversial megamerger of Aetna and Humana.
- The move makes Missouri the first state to conclude the deal would be anti-competitive and determine that if it proceeds, the new company will be barred from selling individual, small group, and some Medicare Advantage plans in the state.
- The order does, however, give Aetna and Humana the opportunity to submit a plan to "remedy the anti-competitive impact" of the deal within 30 days, which is likely to mean divesting some Medicare Advantage plans, as Modern Healthcare reported.
Aetna announced plans to acquire Humana for $37 billion in July 2015. If completed, the deal could make Aetna the second-largest U.S. insurer.
Last month, the Center for American Progress revealed an analysis on the pending merger that showed the loss of competition would likely result in higher premiums for seniors, further consolidation in insurance markets, and increased costs to the Medicare program and taxpayers.
Missouri's decision has marked the first real roadblock in the merger's path after 15 of 20 involved states already approved the deal. However, state regulators only speak for themselves. Federal regulators will ultimately decide whether the deal can go forward. That said, if additional states object, that could present more serious questions about whether the federal regulators.
California, which has not yet made a decision, could have that kind of influence, Avalere Health chief executive Dan Mendelson told Reuters. He suggested other states will also be likely to name concerns they want addressed through divestitures or other concessions.
The other matter is whether divestitures would actually resolve the antitrust concerns.
“The history of divestitures curing antitrust problems is a very shady history, and that's especially true for insurance companies,” Duke University antitrust law professor Barak Richman told Modern Healthcare. “It usually does not create a meaningful competitive counterforce.”