CVS, Aetna urge Connecticut regulators to approve proposed acquisition
The Connecticut Insurance Department now has 30 days to decide whether to approve CVS Health Corp.’s acquisition of Hartford-based Aetna Inc. – a merger the companies say will drive down health care costs and opponents portray as anti-competitive and harmful to patients.
“Our vision is to create a new open health care model that will help consumers improve their health and simplify their health care experience,” said Tom Moriarty, executive vice president at CVS, during a public hearing Thursday in Hartford. “We will put consumers at the center of their care … We will focus on prevention, chronic conditions and primary care.”
And while a commitment from CVS to keep its insurance operations in Hartford for another decade, if the acquisition is approved, drew praise from the city and state officials, pharmacists, the Connecticut State Medical Society and others expressed grave concerns.
Nathan Tinker, CEO of the Connecticut Pharmacists Association, said his organization strongly opposes the merger. “We feel strongly that we must look beyond merely the local economic benefits and understand the devastating impact that this merger may have on access to patient care nationwide,” Tinker said.
“In short,” he continued, “CPA is very concerned that increased vertical integration in the health industry will contribute to higher costs, negatively impact patient choice and drive independent pharmacies out of business.”
Others, including the Connecticut State Medical Society and the Universal Health Care Foundation of Connecticut, expressed their concerns in written testimony submitted to the insurance department.
Paul Lombardo, director of the insurance department’s Life and Health Division, asked representatives of the two healthcare giants — both “big players” in what some have called a “broken health care system” — could fix the system with a merger.
Paul Wingle, vice president of operations, product and technology at Aetna, said the segments or “silos” in the health care industry have made it very difficult for improvement.
“The elimination of this very important silo means that it’s no longer a situation where one side’s costs is another side’s revenue. Our interests are completely aligned and aligned around keeping our members well and healthy,” he said.
Joe Brennan, president and CEO of the Connecticut Business and Industry Association, said Thursday his organization supports the acquisition.
“We think this is just a tremendous, tremendous move for the state of Connecticut, having these two companies combine, and particularly given the commitment that was announced yesterday,” Brennan said.
CVS, in writing, committed to keeping its insurance business in Hartford at least 10 years, maintaining staffing levels for at least four years and honoring existing philanthropic agreements. This was praised by Hartford Mayor Luke Bronin, Gov. Dannel P. Malloy and Lt. Gov. Nancy Wyman.
“Aetna’s Hartford presence and partnership are vital to the City of Hartford, and CVS Health’s commitment to maintaining its insurance headquarters, employees, and civic engagement in Hartford for years to come is a huge win for the Capital City and for Connecticut as a whole,” said Bronin in a statement on Wednesday.
The mayor sent a letter to the insurance department in August in support of the proposed acquisition.
Hartford has been Aetna’s home since 1853, Malloy said.
“I am thrilled that the capital city will remain the company’s home for the foreseeable future,” said Malloy in a statement on Wednesday. “CVS Health is a strong corporate partner for the city and state, and we welcome this long-term commitment.”
The insurance department now has 30 days to render a decision, which is only one of many approvals the proposed merger requires. The U.S. Department of Justice and several states also have to decide on the acquisition.
CVS spokeswoman Erin Britt said in an email that “a substantial number of states have approved the transaction,” but wouldn’t disclose which states had OK’d the merger.
Britt said that some states prefer to wait for the DOJ decision before finalizing their own decisions.
“As a result, we expect that a number of approvals will occur shortly after receipt of DOJ approval,” she said.
A Department of Justice spokesman declined to comment on the proposed acquisition.
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