A federal judge has rejected health insurer Aetna's plan to buy rival Humana Inc. for about $34 billion and become a major player in the market for Medicare Advantage coverage.
U.S. District Judge John Bates said in an opinion filed Monday that he largely agrees with federal regulators who contended that such a combination would hurt competition.
Aetna spokesman TJ Crawford said the insurer was reviewing the decision "and giving serious consideration to an appeal after putting forward a compelling case."
A U.S. Department of Justice spokesman had no immediate comment on the decision.
The Justice Department sued last summer to block Aetna's deal and Blue Cross-Blue Shield carrier Anthem Inc.'s proposed $48-billion purchase of Cigna Corp. Both cases went to trial late last year. An opinion has yet to be rendered for the Anthem case.
The two deals would consolidate the nation's five largest insurers into three, a list that includes UnitedHealth Group Inc., currently the largest.
The big insurers argued that by getting bigger they will be able to negotiate better prices with pharmaceutical companies, hospitals and doctor groups that also are growing. They also expect to cut expenses and add more customers, which helps them better spread the cost of investing in technology to manage and improve care.
But Bates said in a 158-page opinion that the Aetna-Humana combination would "likely substantially lessen competition" in a couple markets: Medicare Advantage plans, which are fast-growing, privately run versions of the government's Medicare program, and on public health insurance exchanges.
Federal regulators had said in July, when they sued to block the deals, that the combinations would hurt competition that restrains the price of coverage and reduce benefits, among other drawbacks.
Shares of Hartford, Connecticut-based Aetna Inc. fell more than 2 percent, or $2.68, to $119.87 Monday afternoon, and Indianapolis-based Anthem Inc. was down $1.55 to $149.14. Shares of other major insurers also slipped, along with broader indexes.
U.S. Sen. Richard Blumenthal applauded Monday's ruling.
“Today’s ruling is a decisive victory for jobs, consumers, and healthcare. Mega mergers like the proposed consolidation of Aetna and Humana raise prices, lower health care quality – and kill jobs,” Blumenthal said. “Instead of consolidating, we need these insurers to compete and expand, so they can do more business and more hiring in states like Connecticut. I am committed to helping these companies succeed as thriving, independent competitors – increasing opportunities in the marketplace for consumers, and supporting job growth," Blumenthal said in a statement on Monday.
Blumenthal said Aetna-Humana merger would pose "a threat to jobs in Connecticut." The senator for Connecticut said on Monday that he "strongly supports steps to help these insurers succeed and expand as thriving, independent competitors in Connecticut—so they can do more business and job-creating in the state."
Blumenthal along with U.S. Senators Al Franken (D-MN), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Edward J. Markey (D-MA), Dianne Feinstein (D-CA), and Mazie K. Hirono (D-HI) have previously called on DOJ to block two proposed health insurer mergers.
Universal Health Care Foundation of Connecticut released a statement on Monday saying it has opposed the Aetna-Humana merger.
"We are pleased that the court decided to put the interests of consumers first by stopping the Aetna-Humana mega-merger,” said Frances. G. Padilla, president of Universal Health Care Foundation of Connecticut. “This is especially good news for seniors who need access to affordable Medicare Advantage plans.”
To see their letter, click here.
AP Writer Eric Tucker contributed from Washington, D.C. Murphy reported from Indianapolis.
Copyright 2016 WFSB (Meredith Corporation). The Associated Press contributed to this report. All rights reserved.