Louisville, Ky.-based Humana has been approved for takeover by Aetna by Kentucky regulators, according to a statement from the Kentucky Department of Insurance Commissioner Brian Maynard.
The order approving the request from Aetna to acquire Kentucky domestic insurers CHA HMO Inc., Humana Health Plan Inc., Humana Insurance Company of Kentucky, and The Dental Concern Inc., was signed Feb. 3 by Maynard. The $37 billion deal was initiated by Aetna last July.
“After thorough review by internal financial staff and outside economists, we found no reason to deny or delay the approval,” Maynard said in statement. “Our review concluded there would be no adverse impact on consumers. In fact, all indications are that overall competition in Kentucky’s health insurance market is strong.”
The order also states that the acquisition will not substantially lessen health insurance competition in Kentucky or create a monopoly.
The newly-appointed commissioner said based on his office’s in-depth review, the hearing that had been scheduled by Maynard’s predecessor, Sharon Clark, was cancelled.
“I felt no need to conduct a formal public hearing on the request, which would have been a time-consuming exercise that would have resulted in additional expense being passed on to the consumer. In this case, a hearing would have been an unnecessary formality. We saw no reason to add additional costs to the process,” Maynard said.
According to a Feb. 12 story by the Courier-Journal, Maynard made his decision before the completion of a report contracted by the Kentucky Department of Insurance that examined and analyzed the competitive implications of the deal. William Custer, director of the Georgia State University’s Center for Health Services Research; and Robert Klein, an associate professor and director of Georgia State’s Center for Risk Management and Insurance, were tasked with examining the proposed merger between Anthem and Cigna in Kentucky, and were also to look at the Aetna-Humana deal, according to the Kentucky Courier-Journal.
Custer and Klein told the Courier-Journal Feb. 10 they were still working on an initial draft of their report and that the Kentucky Department of Insurance had just received a summary statement on the Aetna-Humana merger “last weelk.” However, Custer later told the Courier-Journal that they had discussed the findings of the report “at length” with the Kentucky DOI in addition to the submitted summary statement.
The Louisville, Kentucky Courier-Journal reported Humana currently employs about 13,000 people in the Kentucky region and another 2,700 contractors. Aetna said at the time of the acquisition announcement that it would make Louisville the headquarters for its Medicare, Medicaid and TRICARE businesses and would maintain a “significant corporate presence in Louisville.”
On Feb. 15, the Florida Office of Insurance Regulation issued its approval of the request by Aetna to acquire CarePlus Health Plans, Inc., Humana Health Insurance Co. of Florida, Human Medical Plan, and CompBenefits Co.
OIR said in a statement that an economic analysis on the proposed acquisition found that “the majority of geographic and product markets identified are already characterized as either moderately or highly concentrated before consideration of the proposed acquisition.”
The economic analysis did find that the acquisition would result in some increase “in the degree of concentration that would be viewed as meaningful in markets and regions.” Therefore, the deal was issued a consent order with additional requirements that included:
- A finding that divestiture (moving policyholders to an unaffiliated company) is not in the best interests of Florida policyholders because of its potential to disrupt quality of services, benefits, networks, and cost-sharing provisions.
- A requirement to increase competition in Florida markets by expanding operations on the Federally Facilitated Marketplace into five new counties by 2018 and providing a plan for statewide expansion by 2020.
- An agreement by Aetna that all of its companies 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.
With Florida’s approval, Aetna said it has secured 10 of the 20 state approvals required to complete the deal. The acquisition remains under review by other state agencies and requires approval from those affected states before it can be completed. The acquisition is also pending approval of the U.S. Department of Justice.
“We continue to cooperate with the Department of Justice as it continues its review. It is possible that the Department of Justice will require divestitures in some geographies, which is a standard tool as part of its approval processes. If divestitures are required, there are competitors in good standing that are able to provide consumers with options,” the health insurer said in a statement.