Aetna trial day 6: what you need to know
The witnesses for today were Aetna CEO Mark Bertolini, Steven Kelmar (Aetna's Executive Vice President), Karen Lynch (Aetna's President), Jonathan Mayhew (Aetna's head of individual and public exchange business) and Professor Aviv Nevo (professor at Northwestern who analyzed the likely effects of the merger).
DOJ is summing up their case, arguing that any efficiencies aren't merger specific, Aetna withdrew from the public exchanges to retaliate for DOJ's lawsuit, and that the Aetna-Humana merger will produce a near monopoly in Medicare Advantage (MA).
In answering DOJ's questions, Mr. Bertolini claimed the merger would result in over $3 billion of synergies, once benefits from revenues were factored in. However he provided no specifics. DOJ argued that any synergies were not merger specific, and observed that the Missouri Department also rejected the merger for being anticompetitive.
DOJ produced numerous emails from Mr. Kellmar about withdrawal from exchange markets in various counties. The 17 counties named in DOJ's complaint were mentioned, and Aetna withdrew from those. Mr. Kellmar was quoted as saying, "Most of this [withdrawal] is a business decision, except where DOJ has been explicit about the exchange markets. There we have no choice."
When DOJ questioned Ms. Lynch and Mr. Mayhew, they brought up emails in which the two parties discussed withdrawing from the 17 counties. Mr. Mayhew was quoted as saying "I was told to be careful about putting any of that in writing" and that he wanted to only speak about it in person. He claimed this was taken out of context and that there was nothing shady about it.
DOJ also demonstrated that Aetna was actually making money on the Florida exchanges, yet Florida was one of the states that it recently withdrew from.There is no real reason for this, unless this withdrawal was to spite DOJ for its lawsuit. Mr. Mayhew had no good answer to this.
Professor Aviv Nevo is the government's last witness, and he was eloquent, thorough, and thoughtful. He analyzed the merger and concludes: it will lead to less competition in MA, less competition for individual commercial plans, and higher premiums.
He also showed that seniors first choose MA, then a specific plan, and that 87% of them switch only within MA. DOJ also asked about three counties and he provided statistics.
In Mecklenberg County, North Carolina, Aetna-Humana would have 48% MA market share and an HHI of 3,600. In Polk County, Iowa, Aetna-Humana would have 79% of MA market share, and an HHI of 6,500. And in Shawnee County, Kansas, Aetna-Humana would have 100% of MA market share and an HHI of 10,000 (a monopoly).