Office Approves Aetna Inc.'s Application to Acquire Humana's Florida-based Affiliates
TALLAHASSEE, Fla. – The Florida Office of Insurance Regulation (Office) issued a Consent Order today approving, with additional requirements, Aetna Inc.’s application to acquire 100% of the issued and outstanding voting securities of Humana Health Insurance Company of Florida, Inc., Humana Medical Plan, Inc., Careplus Health Plans, Inc., and CompBenefits Company. The proposed acquisition of Humana’s Florida companies is part of Aetna’s proposal to acquire Humana, Inc.
The Office held a public hearing on December 7, 2015 and received testimony from Aetna and public comments regarding the acquisition. In addition to the public comments and supporting information provided by Aetna, the Office conducted a survey of the various market segments impacted by the proposed acquisition. The Office economist reviewed this market data and analyzed the materials submitted in support of the application, specifically focusing on whether the proposed acquisition would reduce competition. The economic analysis 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. While the report found no ”strong evidence of an overall significant reduction in the competitive landscape of the private Florida health insurance markets resulting from this proposed merger”, it did conclude that the acquisition “would result in some increase in the degree of concentration that would be viewed as meaningful in markets and regions.” To reduce market concentration, stimulate competition and promote consumer choice in the individual market, the Consent Order requires as a condition of approval that Aetna commit to expand operations into underserved counties.
Key aspects of the Consent Order include:
· 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.
The proposed acquisition of Humana, Inc. is still subject to review by the U.S. Department of Justice and the Florida Attorney General, under standards that may be materially different than those utilized by the Office. Aetna and Humana shareholders approved the proposed acquisition in October 2015.