The health insurance mega-mergers proposed nearly a year ago may be entering their final months of regulatory review and the road ahead could be rough.
Last week, Missouri threatened to bar Aetna and Humana from selling health insurance in the state if their transaction is approved unless the companies alleviate competitive concerns. Some observers view the order as a routine starting point for negotiating divestitures and other concessions, but others say it shows the U.S. Justice Department and other states are going to look hard at how the deals would affect consumer and Medicare Advantage markets.
The bad news out of Missouri came days after the Wall Street Journal reported that senior Anthem and Cigna Corp. officials have been sniping at each other about data submissions to regulators reviewing their pending deal. Anthem CEO Joseph Swedish told the newspaper the companies have resolved their differences—which he described as “dynamic tension.”
Missouri is the first state to find serious antitrust problems with either of the deals, and Aetna says it has secured 15 of the 20 state approvals needed to close the deal.
“We are disappointed with the Missouri order but expect to have a constructive dialogue with the state to address their concerns,” Aetna said in a statement. CEO Mark Bertolini said last month that the companies “remain on track to close in the second half of 2016.”
Under the Missouri order, Aetna and Humana have 30 days to “submit a plan to remedy the anti-competitive impact of the acquisition.” But federal regulators and some antitrust experts have increasingly viewed divestitures as an inadequate way to solve antitrust concerns.
“The history of divestitures curing antitrust problems is a very shady history, and that's especially true for insurance companies,” said Barak Richman, an antitrust law professor at Duke University. “These are not individual products that are just manufactured at factories. These are networks and contracts and coordinated relationships that are very difficult for another company to take over.”