Aetna's acquisition of Humana is creeping toward the finish line, getting an approval Monday from one of California's health insurance regulating bodies.
Aetna's approval process stands in stark contrast to Anthem's purchase of Cigna Corp., which has faced more publicized internal and external battles and could be on its way to the chopping block.
On Monday, the California Managed Health Care Department gave Aetna the thumbs-up for its $37 billion takeover of Humana, an insurer that has endured many obstacles over the past year and mostly covers seniors through Medicare Advantage. The department mandated Aetna make a few relatively small concessions, such as investing $50 million in various healthcare projects. The Managed Health Care Department has not yet weighed in on the Anthem deal.
Missouri is the only state thus far that has raised a stink over Aetna's transaction, and many industry attorneys and analysts believe Aetna can placate state officials and the U.S. Justice Department by divesting some overlapping assets where insurance competition would be lessened. Still, many providers and consumer advocates have demanded both large mergers be stopped altogether.
Meanwhile, a new Wall Street Journal article, citing anonymous sources, reports that Justice Department officials are not at all convinced Anthem and Cigna can alleviate their antitrust concerns. Regulators are concerned the Anthem deal would lead to too much consolidation within the national employer market, where most Americans receive their health insurance.
Indeed, many employer health groups have indicated their company members are concerned about the Anthem-Cigna merger, and whether savings would actually be passed along to employers and consumers.
It's clear the Affordable Care Act has hastened mergers and acquisitions in the healthcare industry, from pharmaceutical giants to hospitals to the largest health insurers. But the Federal Trade Commission and Justice Department have each challenged popular deals, raising questions about whether healthcare organizations have pushed the limits of their own dealmaking.
Aetna and Anthem likely sit just weeks away from learning their own fates. Analysts agree that for right now Aetna may have a better shot of grabbing federal approval, whereas Anthem's odds are at a coin flip. It's difficult to solve competitive concerns in situations that already have a lot of concentration, like the national self-insured market.
Just last week, a top Justice Department official hinted that “significant work remains” in preserving the country's different marketplaces.
“The United States is in the midst of a merger wave, with the number, size and complexity of mergers among the highest they have been in the last decade,” Bill Baer, the assistant attorney general of the Justice Department's antitrust division, said at an antitrust conference. He mentioned the health insurance industry, and how his department is reviewing the Aetna and Anthem deals: “We cannot afford to let up our efforts.”
