U.S. attorneys said Monday that a Aetna and Humana merger would result in increased Medicare prices along with lower benefits and quality for seniors.
In opening arguments Monday, government lawyers argued the merger of top Medicare Advantage players would create more than $500 million in annual harm to seniors and taxpayers. Humana is the second largest Medicare Advantage insurer while Aetna is the fourth.
The U.S. Justice Department is challenging Aetna's proposed $37 billion acquisition of Humana. The DOJ is also suing to stop the proposed $53 billion merger between Anthem and Cigna. Decisions on both cases are expected early next year.
A key consideration in the Aetna/Humana case is whether Medicare Advantage plans compete with traditional Medicare plans. The government argues that they do not, while Aetna contends that they are in the same market and that the CMS treats and regulates both kinds as functional substitutes.
Justice Department lawyer Craig Conrath told Judge John Bates of the U.S. District Court that internal emails and deposition statements indicate that Aetna executives themselves see the markets as separate and organize their products as such.
Aetna has also argued that an agreement to sell some of its assets to Molina Healthcare would alleviate concerns of anti-competitiveness. But in the government's opening statements, it argued that Molina is “a trivial competitor in Medicare advantage” and that Aetna would not be selling Molina assets that would allow it to compete effectively.
Conrath said the merger is unlawful in all of the more than 350 markets that would be affected. Those markets, spread throughout the country, include 1.6 million seniors enrolled in Medicare Advantage and more than 970,000 of them are enrolled in an Aetna or Humana plan.
He also said Aetna's withdrawal from the Affordable Care Act exchanges should not be credited because it could re-enter at any time. Aetna has denied accusations from the government that it pulled out of the exchanges in response to the challenge of the merger.
If the merger falls through, Aetna will have to pay Humana $1 billion.