Florida regulators on Monday approved Aetna’s acquisition of Humana with conditions, including that the combined company — poised to become the state’s largest by premiums — must enter five new counties in the online health marketplace.
Overall, the state’s Office of Insurance Regulation found the combination of two of the state’s top four health insurers by premiums “would not substantially lessen competition in insurance in this state or tend to create a monopoly.”
Other conditions of approval, according to a statement by Florida officials:
* An agreement Aetna will maintain fair treatment of individuals living with HIV.
* A requirement that the financial strength of Aetna’s Florida-based HMOs be increased by requiring compliance with Risk-Based Capital standards.
In a statement, Aetna said it has now secured 10 of 20 state approvals required, but noted it is possible the U.S. Department of Justice’s antitrust review “will require divestiture in some geographies, which is a standard tool as part of its approval process.”
As for approval in the third largest state, Aetna declared itself pleased.
“Florida’s evaluation was based on a thorough review of the competitive environment in the state,” the company said. “We are pleased that in its review, the OIR recognized how traditional Medicare competes with Medicare Advantage plans, and that consumers have robust choice in a competitive landscape.”
With regard to serving more counties, Aetna said, “As we consider our future presence on the exchange, we will look for opportunities to expand into communities where we can give consumers a valuable offering at an affordable cost.”
Aetna and Humana representatives said in a December hearing they expect to save $1.25 billion through their proposed merger by 2018 and their combined expertise will help them serve customers more efficiently. The deal would build on “complementary” strengths in different areas of business, they argued.
Consumers Union and eight other consumer and worker groups disagreed in a comment letter, saying the combination means fewer choices and reduced competition.
“While the merging companies have argued supposed benefits associated with these mergers, available scholarly evidence suggests that consumers will see limited to no benefits and instead will face higher costs, less innovation, and potentially lower quality of care,” the comment letter said.
For example, the combination would control over half of all Medicare Advantage enrollees in Palm Beach and four other counties, plus one of the nation’s highest concentrations of market power for insurers who administer plans for companies who pay their own claims, the groups said.
The state’s approval appears to position the combined company to be the largest in the state by premiums, though numbers in a state report represent a year-old snapshot.
Top Health Insurers in Florida
(Premium for Calendar Year 2014)
1. Guidewell Mutual Holding Group (Florida Blue) $10.8 billion
2. Humana Inc. $10 billion
3. UnitedHealth Group $9.4 billion
4. Aetna Inc. $4 billion
Source: Florida Office of Insurance Regulation