Missouri says the merger of the two insurance giants would make the state's Medicare Advantage market anti-competitive. It's asking the companies to propose remedies that would address the state's concerns.
The State of Missouri has thrown up a hurdle to the controversial merger of insurance giants Aetna and Humana.
John M. Huff, director of the state’s Department of Insurance, this week issued a preliminary order stating the $37 billion deal would hurt competition in some of the state’s insurance markets.
Huff ordered Aetna and Humana to exit Missouri’s Medicare Advantage market, as well as its comprehensive individual and comprehensive small group markets, if the deal goes through.
In those markets, Huff said, “…the proposed acquisition would produce an anti-competitive effect by exacerbating a significant trend toward increased concentration and, additionally, by lessening competition…”
Other types of insurance would not be a problem, Huff said, because he said the merger wouldn’t substantially lessen competition in those areas.
However, Huff also gave the company a window of time during which they can submit a plan to address the state’s concerns.
Missouri is the first state to formally raise concerns about the merger. So far, Aetna says it has received approvals from 15 of the 20 states required. The Department of Justice is also conducting a separate review of the proposed merger.
TJ Crawford, an Aetna spokesman, told CNBC that the Missouri objections won’t affect the federal process.
“This order does not impede the DOJ approval process,” he said. “We are disappointed with the Missouri order but expect to have a constructive dialogue with the state to address their concerns.”
For its part, the American Medical Association applauded Missouri, labeling the state’s decision a “bone-crushing defeat” for the merger. In a statement, AMA President Steven J. Stack, MD, said Missouri is taking the right approach.
“The Missouri order strongly validates concerns that AMA has expressed to Missouri regulators, as well as the US Department of Justice, and officials in other states impacted by the proposed health insurer mergers,” he said.
If approved, the Aetna-Humana merger is expected to close in the latter half of 2016.