Aetna-Humana Deal Approved in California, with Conditions

June 21, 2016

The California Department of Managed Health Care approved Aetna Inc.’s acquisition of Humana Inc. with conditions including the insurer’s commitment to keeping premium increases at a minimum in the small group HMO business and to making about $50 million in community investments.

The managed healthcare department’s director, Shelley Rouillard, said in a statement that the actions will help control healthcare costs in the state. Aetna has also committed to keeping key functions and operations in the state.

Aetna spokesman T.J. Crawford said that the company has agreed to the conditions outlined by the regulator and that it continues to expect the transaction to close in the second half of 2016.

In addition to state regulators, national antitrust regulators are also reviewing the proposed deal which was originally announced in July 2015.

Aetna said it would invest over the next three years $6 million in consumer assistance programs for seniors and people with disabilities, $3 million for dental services in low-income or underserved communities, $23 million for a service center in Fresno, $1 million to expand telehealth services, and $16.5 million to support pay for performance medical programs.

“While California is not a critical State for the deal given (Humana’s) small presence, it is another indication that the merger anti-trust review is on track with only four states remaining for approval,” Leerink analyst Ana Gupte said in a research note.

Aetna shares were up 1.7 percent at $123.10 and Humana shares were up 2 percent at $190.91 on Monday afternoon, both lifted by the news.

Reporting by Caroline Humer in New York and Diane Bartz in Washington D.C.; Editing by Chris Reese and Matthew Lewis

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