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Regulators have tough job in review of Aetna-Humana merger

CEO Mark Bertolini hopes to close transaction in second half of 2016

As the industry awaits word from federal regulators on the outcome of their review of the proposed Aetna-Humana merger, experts say the process is certain to be challenging and complicated.

Aetna announced its $37-billion takeover bid for its fellow insurer in July, a move soon followed by Anthem's $54.2-billion deal with Cigna. Both federal and state regulators are scrutinizing the deals, while Aetna and Anthem CEOs Mark Bertolini and Joseph Swedish have testified in congressional hearings about the transactions.

In their analysis of the Aetna-Humana deal, federal authorities are likely to subpoena health claims data from the two companies and others in the industry to figure out the insurers' pre- and post-merger market shares, Jose Fernandez, associate professor of economics at the University of Louisville, tells Insider Louisville.  

The merger is likely to benefit Aetna and Humana's bottom lines, which regulators won't have a problem with unless they determine the deal doesn't help the insurers' customers, he adds. Provider groups and even presidential candidate Hillary Clinton have expressed doubts that insurer consolidation will indeed benefit consumers. Yet Bertolini said during one recent congressional hearing that the merger will result in the companies offering "a large number of consumers a broader and higher-quality array of more affordable products."

But determining that market effect is "a tough statistical problem" since regulators will be working strictly in hypotheticals, David Zimmer, an associate professor of economics at Western Kentucky University who has worked for the Federal Trade Commission, tells the publication. Research on whether insurer mergers raise prices for consumers shows mixed results, he adds.

Aetna and Humana shareholders recently voted to approve the merger, and Aetna CEO Mark Bertolini said in a recent conference call about the company's third-quarter earnings that "we remain confident that we are on track to achieve a successful close in the second half of 2016."

To learn more:
- read the article
- here's the call replay

Related Articles:
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Aetna, Humana shareholders approve health insurers' merger
Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition
All eyes on how regulators will respond to massive health insurer mergers
Too soon for Aetna, Anthem to declare victory in merger review process