Antitrust Laws and Blocked Mergers: Private Healthcare Amid the Obamacare Repeal

Kelsey Yurek     COL 2019

On January 23, 2017, the U.S. District Court blocked the merger of Aetna and Humana, two well-known healthcare companies. [1] Both companies provide Medicare options across the country and work in conjunction with the federal government to administer these services through private corporations. The Court ultimately ruled that the acquisition would be unlawful and violate federal antitrust laws.

Today, three federal antitrust laws make up the core parameters which generally determine unlawful mergers and business practices: the Sherman Act (1890), the Federal Trade Commission Act (1914), and the Clayton Act (1914). [2] Overall, these laws aim to “protect the process of competition for the benefit of consumers, making sure there are strong incentives for business to operate efficiently, keep prices down, and keep quality up.” [3]

From the Court’s perspective, this merger would have prevented consumers from having the ability to obtain plans such as Medicare Advantage. Medicare Advantage typically provides insurance to working families and individuals as well as seniors. [4] By blocking the merger, the Court sought to either maintained or increased the competition between Aetna and Humana and achieved that which the antitrust laws aim to do—keep quality up and prices down.

The trial proceeded in relatively quick succession from the initial complaint. The Justice Department, the District of Columbia, and eight states first sued to stop the merger in July 2016. [5] The following month, Aetna announced that it would pull its services from most states where it was serving individuals through Obamacare. [6] Prior to the lawsuit, Aetna had originally intended to further expand its services to additional states once acquiring Humana. Now, however, it remains unclear whether or not the decision will ultimately impact the direction they take.

With the current repeal of Obamacare underway, this raises the question of whether additional citizens could potentially lose healthcare due to the blocked merger. It seems as if this loss is precisely that which the government looked to avoid. The decision will “save customers and taxpayers up to $500 million per year” and avoid the divestment of “290,000 Medicare Advantage customers to Molina Healthcare.” [7] Despite this, if Aetna does indeed pull its services from all but 10 states due to the litigation over Humana, then it may impact many more Americans than just that. [8]

Granted, this is not the first nor will it be the last time that a court has blocked a merger and there are consequences for consumers. With that, cell phone companies and airlines do not comprise a basic need that so many Americans are lacking. This case, in particular, has further ignited the question of where our healthcare system is headed and how law and government will continue to interact with it over the next four years.

 

Works Cited

[1] “U.S. District Court Blocks Aetna’s Acquisition of Humana.” The United States Department of Justice. N.p., 23 Jan. 2017. Web. 31 Jan. 2017. <https://www.justice.gov/opa/pr/us-district-court-blocks-aetna-s-acquisition-humana&gt;.

[2] “The Antitrust Laws.” Federal Trade Commission. N.p., n.d. Web. 31 Jan. 2017. <https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws&gt;.

[3] Id.

[4] Id.; “U.S. District Court Block Aetna’s Acquisition of Humana.”

[5] Hiltzik, Michael. “Smoking Gun? Aetna Threatened to Quit Obamacare If the Government Blocked Its Humana Merger.” Los Angeles Times. Los Angeles Times, 17 Aug. 2016. Web. 31 Jan. 2017. <http://www.latimes.com/business/hiltzik/la-fi-hiltzik-aetna-obamacare-20160817-snap-story.html&gt;.

[6] Id.; “Smoking Gun? Aetna Threatened to Quit Obamacare If the Government Blocked Its Humana Merger.”

[7] Id.; “U.S. District Court Block Aetna’s Acquisition of Humana.”

[8] Id.; “Smoking Gun? Aetna Threatened to Quit Obamacare If the Government Blocked Its Humana Merger.”

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