A US federal judge on Monday ruled that a US$37 billion merger between health insurance giants Aetna Inc and Humana Inc should not be allowed to go through on antitrust grounds, siding with the US Department of Justice, which had been seeking to block the deal.
The deal is one of two mega-mergers proposed by the nation’s largest health insurers.
Both were challenged by administration of former US president Barack Obama.
Another federal judge is expected to rule soon on a case involving Anthem Inc and Cigna Co, the larger of the two deals at US$48 billion.
Citing sweeping changes to the industry caused by the US Affordable Care Act, insurers had embarked on a frenzy of deal-making a year and a half ago. The proposed combinations promised to reshape the industry by shrinking the number of the largest insurers from five to three; the largest, UnitedHealth Group, remained independent.
The industry finds itself in arguably an even greater state of flux, with US President Donald Trump and the Republican-controlled US Congress having vowed to repeal the act and replace it with something else, the details of which are unknown.
Monday’s decision adds to the uncertainty facing the industry.
While the judge found that a merger of Aetna and Humana would not be in the interest of its consumers, companies are likely to remain interested in future combinations. Insurers view mergers as a way to gain greater clout in negotiations with hospitals and doctors.
An Aetna spokesman said the company was reviewing the opinion and “is giving serious consideration to an appeal.”
Humana did not respond to an e-mail seeking comment.
If the deal falls apart, Aetna would have to pay Humana US$1 billion, according to the terms of the merger agreement.
The Aetna-Humana combination was largely focused around the private market for Medicare Advantage plans, a fast-growing area in the industry in which companies offer private insurance as an alternative to the federal government’s traditional Medicare program.
Humana, while smaller than its rivals, has a strong position in the Medicare Advantage market.
The deal came under sharp criticism from consumer advocates and US government officials, who argued that the private market was already concentrated.
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