Fighting to save its proposed $37 billion acquisition of Humana Inc., Aetna Inc. raised questions Monday about the future of the Affordable Care Act under a GOP-controlled Congress and the incoming administration of President-elect Donald Trump, as the trial over the insurers’ proposed merger began in a Washington federal court.
The U.S. Justice Department sued in July to block the deal, calling Aetna’s acquisition of Humana, coming at the same time as Anthem Inc.’s proposed takeover of Cigna Corp., an “unprecedented consolidation in the health insurance industry.”
Antitrust prosecutors contend the Aetna-Humana tie-up would harm senior citizens on Medicare Advantage plans and individuals younger than 65 who seek coverage through the Affordable Care Act exchanges.
A month after the Justice Department sued to block the deal, Aetna pulled out of some exchanges, including those for individual insurance in Florida, Georgia and Missouri.
In his opening statement Monday, DOJ lawyer Craig Conrath, a top lawyer in the department’s Antitrust Division, said Aetna’s retreat from ACA exchanges was an attempt to evade antitrust scrutiny “by the equivalent of closing up shop.”
Conrath urged U.S. District Judge John Bates to still evaluate the “underlying competitive reality.”
“In this case, the evidence was not just subject to manipulation but manipulated,” Conrath said.
“Don’t look at the closed sign, look at the shop behind it,” he added.
Aetna’s chief trial lawyer, John Majoras, a partner at Jones Day, countered that the withdrawal from the exchanges was made to avoid “hundreds of millions in losses” that the insurer, like some of its competitors, has incurred by participating in the ACA exchanges.
“The exchanges, frankly, were always on shaky ground,” Majoras said. There are questions, he said, about “what the Affordable Care Act will look like” in the coming months. Majoras and other lawyers didn’t name Trump, who has vowed to repeal or otherwise replace Obama’s health care law.
Majoras said Aetna’s decision to pull out of most exchanges is irrevocable, meaning that the insurer cannot return to those markets until 2018 at the earliest.
Medicare plan asset deal
In an effort to address separate concerns with the acquisition, Aetna and Humana entered into agreements to sell off Medicare Advantage assets to Long Beach, California-based Molina Healthcare Inc. The divestiture deals, totaling $117 million, are contingent on Aetna and Humana consummating their merger.
Describing Molina as “not a formidable player,” Conrath said the divestiture plan fell short of addressing the antitrust concerns that the deal raises for the Medicare Advantage market.