Aetna Inc.’s $37 billion deal to buy rival insurer Humana Inc. was blocked by a federal judge, thwarting one of two large mergers that would reshape the U.S. health care landscape.
Aetna said it was considering an appeal.
The transaction would violate antitrust laws by reducing competition among insurers, U.S. District Judge John D. Bates in Washington, D.C., ruled on Monday. With the deal defeated, Aetna owes Humana a $1 billion breakup fee under the terms of the merger agreement.
“The Court is unpersuaded that the efficiencies generated by the merger will be sufficient to mitigate the anticompetitive effects for consumers in the challenged markets,” Bates wrote in his 158-page opinion.
In July, the Justice Department sued to block the merger, arguing that it would reduce competition in the Medicare Advantage market and in some of the exchanges set up under the Affordable Care Act. Medicare Advantage plans are Medicare health plans offered by private insurers.
“We’re reviewing the opinion now and giving serious to consideration to an appeal after putting forward a compelling case,” T.J. Crawford, an Aetna spokesman, said. A Humana spokesman didn’t immediately respond to a request for comment.
Aetna is the parent company of Coventry Health Care, which sells insurance on the Iowa Health Exchange.
The ruling is another victory for antitrust enforcement efforts initiated by the Obama administration. A separate Justice Department challenge, against Anthem Inc.’s $48 billion bid for Cigna Corp., also is pending a ruling.
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Anthem is the parent company of Amerigroup, one of the three managed-care organizations that oversees Iowa’s Medicaid program.
Matthew Cantor, a partner at Constantine Cannon, an antitrust law firm, said Monday’s decision was based on a thorough analysis by the judge and argued that an appeal likely would be difficult from a legal standpoint.
But he noted that a wild card could be the role of the Trump administration, which is pressing to replace the ACA and will be negotiating with insurers who sell plans in the marketplaces and in whatever replaces them.
“You have a White House — at least when they were in the president-elect phase — that has seemingly been receptive to having discussions with executives whose mergers are under review,” Cantor said.