Seven ways the blocked Aetna-Humana merger affects the industry
The proposed megamerger has been shot down. Find out what it means for healthcare execs.
As the future of the Affordable Care Act (ACA) hangs in the balance, courts have been feeling the pressure, as demonstrated by a federal judge’s decision to block a proposed merger between Aetna and Humana, according to experts.
“Consumers have become hypersensitive to the lack of choice created by the ACA,” says David Reid, founder and CEO, EaseCentral. “In some markets consumers are reduced to a single plan option. Courts appear to be feeling the pressure.”
Christian Auty, principal from Much Shelist, agrees. “This sector just got even more complicated, and your jobs just got even more difficult,” Auty says. “There is already an incredible amount of uncertainty around just what might replace the ACA. Of course, these companies decided to merge before Trump was elected, but ironically the business case for a larger, more stable entity might be stronger now than when the merger was announced. The result of the court’s outright rejection is that there will be more players competing, even as the rules of the game are in considerable flux.”
The $37 billion merger case is significant and a restructuring deal may be a possibility, according to experts.
The decision can be appealed of course, according to Auty, although many industry watchers are already suggesting any appeal will be an uphill battle.
“Most commentators also agree that the opinion was well-reasoned and, certainly, Aetna’s pre-merger decision to withdraw preemptively from certain ACA markets did not help its cause,” he says. “The deal is not dead yet, but it is not looking good unless enforcement priorities change dramatically with the new administration.”
Renick
Both Aetna and Humana remain with strong core businesses and for the time being will continue to independently pursue Medicare Advantage growth, in particular, says Dan Renick, RPh, president, Precision for Value.
“Initial expert legal reactions portend unlikely success upon appeal in the near-term, though broad signals from the Trump administration suggest a future Justice Department antitrust team that may be more open to these deals down the road,” he says.
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