February 16, 2017
Valentine's Day was anything but a love-fest in the U.S. health care insurance industry. In the face of strong resistance from federal regulators and recent court setbacks concerned with stifling competition in the health insurance market, Aetna and Humana abandoned their plans to merge, and within hours, CIGNA sought to end its merger plans with Anthem.
According to Aetna's press release, Aetna will pay Humana $1 billion as a result of terminating the merger agreement. Additionally, Aetna announced that it has terminated its previously announced agreement to sell certain Medicare Advantage assets to Molina Healthcare, Inc. and will pay the applicable fees associated with that termination.
Terminating the Anthem-CIGNA deal appears to be anything but mutual. After the U.S. District Court for the District of Columbia blocked the deal on antitrust grounds, CIGNA sued Anthem for $1.85 billion in reverse termination fees and for over $13 billion in additional damages. The next day, however, on February 15, 2017, Anthem turned around and sued CIGNA, seeking to block termination of the merger and to compel performance with the terms of the agreement.
Also, Humana announced plans to exit the Marketplace in 2018 in the 11 states it currently is participating in, dealing a blow to the continued viability of the public exchanges, as fewer plans on the Marketplace means that there is less competition between companies that could help drive down plan prices. Many companies, including, Humana, Aetna and United Healthcare had already scaled back participation in the Marketplace for 2017.
We will continue to monitor developments in the U.S. health care industry as they occur and their impact to employers, especially in light of anticipated changes to the Affordable Care Act in the months ahead.
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