(Bloomberg) — Aetna warned antitrust officials more than a month ago that it would pull out of the Affordable Care Act government-run markets for health insurance if the U.S. attempted to block its $37 billion merger with Humana
In a July 5 letter to the Justice Department from Chief Executive Officer Mark Bertolini, Aetna said that challenging the merger “would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support” of plans sold under the ACA. That would leave the insurer “with no choice but to take actions to steward its financial health.”
The letter, which Aetna said was written in response to a Justice Department request, was first reported by the Huffington Post. Bloomberg obtained a copy from a person familiar with the matter, who provided it on condition of anonymity.
“If the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint,” Bertolini wrote. He said that the cost of litigation and debt taken on by Aetna, the need to plan for a breakup fee it would owe Humana, as well as cost savings from a successful deal, would all factor into Aetna’s need to pull back.
“By contrast, if the deal proceeds without the diverted time and energy associated with litigation, we would explore how to devote a portion of the additional synergies (which are larger than we had planned for when announcing the deal) to supporting even more public exchange coverage,” Bertolini said in the letter.
The Justice Department sued to block Aetna’s takeover of Humana on July 21, saying the deal would harm competition in the market for private Medicare plans as well as on the ACA exchanges. Aetna made good on its threat on Monday, saying it would exit 11 of the 15 state exchanges where it currently offers coverage.
The case is scheduled to go to trial on Dec. 5. Mark Abueg, a Justice Department spokesman, and Benjamin Wakana at the Department of Health and Human Services both declined to comment
Aetna said in an e-mailed statement Wednesday that its worsening results — not the Justice Department’s lawsuit — caused it to pull out of the ACA markets, although the lawsuit had hurt the company’s finances.
“That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year,” Aetna said.
Have you followed us on Facebook?