Federal antitrust reviewers will likely look market to market in deciding whether to approve the proposed Aetna-Humana merger and other looming health insurance industry tie-up deals, experts say.
Aetna CEO Mark Bertolini said his company is ready for government examination as it prepares to buy Humana for $37 billion. The deal includes a $1 billion fee that Aetna would pay Humana if the merger fails to pass its antitrust review. Aetna has already discussed possible divestitures in particular markets. “We took a conservative view of what we thought we would need to divest,” Bertolini said during a conference call with investors last week.
But the review process likely will be a complex one, given the size and reach of Aetna and Humana, experts say. And other pending insurance consolidations also may affect how regulators view the Aetna-Humana deal.
In recent weeks, Centene Corp. offered $6.3 billion for Health Net, and Anthem has offered about $47 billion in cash and stock for Cigna Corp. The five largest for-profit health insurers—Aetna, Anthem, Cigna, Humana and UnitedHealth Group—have all been the subjects of merger talks.
Duke University Law Professor Barak Richman said the Justice Department likely will review such deals on a market-by-market basis, keeping in mind their long-term competitive dynamics. Mergers like the Aetna-Humana combination involve many sub-markets in terms of geography and products. “It's a very, very complicated analysis,” he said.
That antitrust review process may be further complicated if more major insurers announce additional deals in coming weeks and months. The Justice Department likely will study the Aetna-Humana merger with an eye toward any subsequent transactions, Richman said.