Wisconsin Office of the Commissioner of Insurance Examines Aetna-Humana Merger

Yesterday, on March 30, the Wisconsin Office of the Commissioner of Insurance (OCI) held a hearing on the proposed merger of health insurance companies Aetna and Humana. The hearing examined the acquisition and its effects on Wisconsin consumers and the health insurance market. It mostly consisted of questions from the OCI and answers from the representatives of the merging companies, with testimony from consumer groups at the end of the hearing. Antitrust lawyer David Balto submitted six questions, and Aetna responded to all of them.

The representatives from Aetna and Humana argued that the merger would not harm competition in the administrative-services-only market, which is one of the main areas of concern. They stated that competition in that market would continue to be vigorous, and that the combined Aetna-Humana entity would only possess about 15% market share. Additionally, the merger would supposedly result in $1.3 billion in efficiencies from IT improvements, less duplication of products and services, better medical records, and other initiatives. OCI noted that Aetna has been fined for consumer violations, and that neither Aetna nor Humana participates in the Wisconsin health insurance exchange. The representatives asserted that they had taken steps to correct the problems, and that they might participate in the exchange in the future.

The questions and answers were followed by testimony from various consumer groups. Representatives of Citizen Action of Wisconsin were present and urged OCI to adopt strict scrutiny for the proposed merger. If OCI did approve the merger, it should be subject to powerful remedies to protect consumers, such as requiring the combined entity to participate in the health exchange, or laying out requirements to ensure that savings actually reach consumers.

David Balto also testified on behalf of the Coalition to Protect Patient Choice. He emphasized the robust powers of state Insurance Commissioners and their ability to block mergers that are anticompetitive and not in the public interest. In response to the claims that the merger would not harm competition, he urged OCI to look at the merger in the broader context of the overall market, since health insurance companies Anthem and Cigna are also attempting to merge. Moreover, Aetna is increasingly competing against Humana in the Medicare Advantage market, and the merger will eliminate this growing competition. He concluded that OCI should fully exercise their extensive power to protect Wisconsin consumers.

The hearing ended with a recommendation from OCI staff that the merger be approved, subject to certain conditions. There will not be a hearing on the Anthem-Cigna merger, and Commissioner Ted Nickel will make the final decision. OCI should follow the suggestions of the consumer groups that testified, evaluate the Aetna-Humana merger in the context of increased health insurance consolidation, and take action to maintain consumer choice and affordable, quality healthcare.