Antitrust Lawyer Blog
On March 27, 2012, the DOJ announced it would require Humana, a leading health insurer in the United States with 2010 revenues of approximately $33.6 billion, and Arcadian, which had approximately 62,000 MA members in 15 states and 2010 revenues of $622 million, to divest assets relating to Arcadian’s MA business in parts of five states in order for Humana to proceed with its acquisition of Arcadian. The DOJ required divestitures of health plans in 51 counties and parishes in Arizona, Arkansas, Louisiana, Oklahoma and Texas. The transaction, as originally proposed, likely would have resulted in higher prices, fewer choices and lower quality MA plans purchased by Medicare beneficiaries.
According to the DOJ, individuals eligible for Medicare, primarily senior citizens, may elect to enroll in a privately provided MA plan instead of traditional Medicare. In establishing the MA program, Congress intended that vigorous competition among private MA insurers would lead insurers to offer seniors a rich set of affordable benefits, provide a wide array of health-insurance choices, and be responsive to the demands of seniors. Approximately 71,000 people were enrolled in MA plans in 51 counties and parishes, accounting for more than $700 million in annual commerce.
The transaction as proposed would have eliminated competition between Humana and Arcadian, two of the few significant sellers of MA plans in 45 of the counties and parishes, allowing Humana to increase prices and reduce the quality of MA plans sold to seniors there. The original deal would have created a combined company controlling between 40% and 100% of the MA health insurance market in these counties and parishes.