CT signs off on Aetna-Humana merger, but other hurdles remain

Aetna headquarters in Hartford

Aetna

Aetna headquarters in Hartford

Washington –The Connecticut Insurance Department has signed off on Aetna’s proposed merger with Humana, but other hurdles remain for that deal and another merger proposed by Cigna and Anthem.

Local and major national players in the health care system continue to oppose the mergers. “Past experience suggests that these mergers will result in higher costs and reduced access to care for Connecticut patients,” Matthew Katz, CEO of the Connecticut State Medical Society, said in a statement Wednesday.

Insurers maintain that the mergers will result in greater efficiencies, saving patients money.

The Connecticut Department of Insurance’s approval of the Aetna-Humana deal makes it one of 15 states that have signed off. The merger needs a total of 20 states for approval.

“We completed the review with no objection,” said Connecticut Insurance Department spokeswoman Donna Tommelleo on Wednesday.

The Connecticut Department of Insurance is the leading state regulator reviewing the Cigna-Anthem merger proposal, and that review is ongoing.

But even if all 20 states approve the Aetna-Humana merger, Missouri insurance officials said on Wednesday they would prevent certain lines of Aetna business and all of Humana’s Medicare Advantage health insurance plans from continuing in that state.

Missouri officials are concerned the merger would shrink competition in the state for Medicare Advantage plans, hurting seniors in the form of higher premiums. Medicare Advantage plans are a primary part of Humana’s business and a prime reason Aetna officials said they want the merger.

Missouri has given the insurers 30 days to respond with solutions that would address its concerns.

Other problems have surfaced regarding the proposed marriage of Cigna and Anthem as well.

In letters between the companies cited in a recent Wall Street Journal story, Anthem accused Cigna of missing deadlines for submitting data to the Justice Department, which is reviewing the proposed insurance mergers. Cigna retorted that those documents took so long to file because problems with the documents and information Anthem provided “are too numerous to catalog fully.”

Citing anonymous sources, the Wall Street Journal said Cigna Chief Executive David Cordani and Anthem CEO Joseph Swedish “have locked horns in the 10 months since the deal was struck.”

The timeline guiding Justice Department review of the mergers has been worked out between the insurers and the department’s Antitrust Division.

A Justice Department spokesman said he could not comment on that timeline.

But Swedish told participants at a UBS Global Healthcare Forum Tuesday that he expects a determination soon, possibly in July.

The companies’ pending $48 billion merger was announced last year within weeks of the one between Aetna and Humana, which is worth about $37 billion. The two mergers would consolidate the U.S. healthcare insurance market from five major insurers to three.

Aetna CEO Mark Bertolini told investors recently he expects the merger with Humana to become final this year.

To help win regulatory approval, Aetna has hired former U.S. Senate Majority Leader Tom Daschle to help. He is the latest in a stable of lobbyists the company has in Washington. According to lobbying disclosure reports, the company spent nearly $1.5 million lobbying federal officials in the first three months of this year.

Daschle told the Connecticut Mirror he is “advising” the company on issues relating to the merger. The former South Dakota senator, who helped craft the Affordable Care Act, also said “a big part” of his work for Aetna is helping the company with matters relating to the ACA.

“I’m proud to be able to bring value to so many areas in health care,” Daschle said. “It’s something Mark Bertolini is very interested in.”

Insurers face strong opposition

There’s strong opposition to the insurance mergers by major players in the nation’s health care system, including the American Medical Association, the American Hospital Association and unions representing health care workers.

They say the mergers would shrink competition in many U.S. cities and states that would result in higher premium costs. The mergers would also give the insurers more clout to negotiate doctor and hospital fees.

On Wednesday, AMA President Steven J. Stack hailed Missouri’s action, saying it gave “the prospect of the Aetna-Humana acquisition…a bone-crushing defeat.”

Cigna headquarters in Bloomfield

Cigna Corp.

Cigna headquarters in Bloomfield

“The AMA strongly applauds Missouri regulators for taking the right approach to prevent the proposed acquisition of Humana by rival Aetna from creating anti-competitive market power that would have threatened Missouri’s health care delivery system,” Stack said.

He also said Missouri’s action “strongly validates concerns that AMA has expressed to Missouri regulators, as well as the U.S. Department of Justice, and officials in other states impacted by the proposed health insurer mergers.”

In a statement, however, Aetna said, “This order does not impede the DOJ approval process.”

“We are disappointed with the Missouri order, but expect to have a constructive dialogue with the state to address their concerns,” Aetna said.

There is also more cohesive Connecticut opposition.

Wednesday, the Connecticut State Medical Society, the Universal Health Care Foundation of Connecticut and the Connecticut Citizen Action Group joined state Rep. Gregory Haddad, D-Mansfield, in a press conference to criticize the mergers.

Haddad also released a May 13 letter to Connecticut Insurance Commissioner Katharine Wade from 17 state legislators asking for a thorough review process of both deals, either of which “may have a negative impact on both the cost and quality of care in Connecticut.”

“I think they will have great influence over the health care delivery system in Connecticut,” Haddad said. “Jobs are also involved,” he said.

The letter asked Wade to include a job-loss analysis as part of her department’s review, to grant “intervenor status” to “interested consumer advocates” and to hold “multiple public hearings… at venues throughout Connecticut… that allow for maximum public participation.”

Bertolini, the Aetna chairman, told shareholders in Avon last week that the deal with Humana included keeping Humana’s operations in Kentucky. The company is based in Louisville.

Bertolini did not commit to keeping Aetna’s headquarters in Hartford, saying “until further notice our corporate headquarters is in Hartford.”

 

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