The federal trial to determine whether insurance giant Aetna’s $37 billion bid to acquire Louisville-based Humana can go through begins today.
The Department of Justice, eight states and the District of Columbia sued over the proposed merger earlier this year. They argue that the deal would reduce coverage and raise prices, particularly for seniors with Medicare Advantage plans.
They also say the merger would stifle competition on Affordable Care Act insurance exchanges in some counties in Florida, Georgia and Missouri.
Earlier this year, Aetna announced it was withdrawing from health insurance exchanges in 11 states including Kentucky, where it sells individual policies in 10 counties. The company cited a $430 million loss as a reason for its decision.
In July, Aetna CEO Mark Bertolini sent a letter to the Justice Department saying if federal regulators sought to block the deal, the insurer would begin pulling out of exchange markets. A little more than two weeks later, DOJ sued to prevent the merger.
Federal regulators argue that Aetna pulling out of insurance exchange markets isn’t an adequate response to concerns about a lack of competition as a result of the proposed deal.
In response to DOJ concerns about health insurance programs for seniors, Aetna argues that seniors still have the option of using traditional Medicare, which provides Aetna-Humana with an incentive to keep prices low.
The company has also divested some of its Medicare Advantage holdings in an effort to appease federal regulators. In August, Aetna-Humana announced it would sell 290,000 Medicare Advantage policies in 21 states to the much smaller Molina Healthcare for $117 million. That’s contingent upon federal approval of the merger.
If the merger goes through, Aetna-Humana would be one of the largest insurers in the country. Nearly a million of the 1.6 million seniors with Medicare Advantage plans in 364 counties where Aetna and Humana currently compete would be covered by the merged company, according to a Justice Department brief in the case.
Humana, which was founded in Louisville, has more than 12,000 employees in the city.