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July 20, 2016 at 10:09 AM
(Bloomberg) — Aetna is ready to go to court if necessary to proceed with its $37 billion takeover of health insurance rival Humana, the company said Wednesday.
Related: 7 ways the Anthem-Cigna and Aetna-Humana deals may chill policy
“We will absolutely defend our deal in court should it come to that,” T.J. Crawford, a spokesman for the Hartford, Connecticut-based company, said by phone.
The insurer is prepared to argue that there are several ways to ensure there’s enough competition in the market for health plans for the elderly, known as Medicare Advantage, according to a person familiar with the matter. In addition, it has already presented two separate divestiture proposals to federal officials, said the person, who spoke on condition of anonymity because the matter is private.
Crawford declined to comment on the company’s divestiture plans or conversations with the Justice Department.
By taking over Humana, which is based in Louisville, Kentucky, Aetna would become the largest player in Medicare Advantage, with about 4.5 million customers. The U.S. has been said to be preparing to sue to block the deal because it would limit options for consumers.
Alex Kepnes, a Humana spokesman, didn’t respond to a request for comment. Mark Abueg, a Justice Department spokesman, declined to comment.
Arguments, Divestiture Plans
If federal officials go ahead with a lawsuit, Aetna plans to argue in court that officials should take a broader view of competition in the Medicare Advantage market, and include the government’s traditional Medicare option in their analysis, the person said. If a court takes that view, or if the Justice Department agrees in a settlement after a suit is filed, it could reduce or eliminate the divestitures needed to let the deal go forward.
Aetna has already presented two divestiture plans to the Justice Department, the person said. Under one scenario, one of two competitors with a national footprint would buy all of the business that Aetna plans to divest. Under the second, Aetna would sell assets to three regional health insurers. The proposals are designed to ensure that viable firms take over the divested assets, and the person said Aetna has already taken concrete steps toward executing both plans.
Aetna and Humana are required to fight a potential Justice Department lawsuit under the terms of their merger, which they struck last year. Alternatively, the companies could come to an agreement to abandon the deal or settle with the U.S. before or after a suit is filed.
