The merger between the two major insurance companies, Aetna and Humana, face new challenges. Despite that, CEOs of the two companies remain confident that the merger will be completed by the end of the year.
Aetna is the third largest health insurer in the US, and Humana ranks No. 4 in the list. According to the Wall Street Journal, they would sit atop the industry when together. However, the merger has raised concerns regarding its effect in the Medicare Advantage (MA) markets in some states.
The new deal is examined by various states and it finally will have to be approved by the US Department of Justice (DOJ) to ensure that it meets Federal anti-trust standards. So far, many states such as California have approved the merger. Director of the state Department of Managed Health Care said she reached an agreement with Aetna, which will help to keep future rate increases to a minimum, and improve the quality of patient care.
Some pros to the merger include the following.
- Medical providers will have easier access to patient medical records and billing options.
- It will reduce pressures to bring down the cost of care.
- Larger presence in the industry puts other carriers on notice that no one is safe from being stalked; so every company needs to up their game when it comes to costs and care.
- Consolidation in the health care space is good, as long as overall competition remains strong.
- Healthcare gets to have greater coverage in more areas with less overlap.
Despite that, Missouri found serious antitrust problems with the merger. Insurance officials have issued a preliminary order against the merger of Aetna and Humana. They have asked the companies to make significant divestment in the MA market in the state.
According to the insurance regulators, the new company would be in violation of anti-trust laws and would have to cease doing business in the countries that would be adversely affected until they are in compliance. Aetna and Humana were given 30 days to submit a plan to remedy the anti-competitive impact of the acquisition.
Most provider groups in Missouri, including the Missouri Hospital Association and the Missouri State Medical Association, filed statements opposing the Aetna-Humana deal. However, some individual providers such as Freeman Health System in Joplin, and Encompass Medical Group in Kansas City, supported the merger.