Aetna trial day 7: what you need to know

December 14, 2016

  •  The witnesses today were Professor Aviv Nevo and the first defense witness, Bruce Broussard (CEO of Humana). DOJ concluded that the merger would drastically reduce competition and lead to higher prices, and the defense began to present why the merger was a good transaction, why competition would not be harmed, and that new companies could enter the market. 

 

  • DOJ reviewed yesterday's testimony, and Professor Nevo concluded that the merger would reduce competition and increase concentration in all 17 of the complaint counties--they all passed both competitive thresholds. Average second-lower silver premiums in the counties would increase by 2.1% (they are the exchange premiums that receive many subsidies).

 

  • The defense then engaged in a rather long argument with Professor Nevo, claiming that his data was based on older surveys and that it did not include information from Aetna and Humana. Nevo responded that his analysis was based on a substantial body of work, that they were trying to compare non-comparable items, and that the merger remained anticompetitive. 

 

  • Judge Bates appeared annoyed, told the defense they were spending too much time arguing with the witness, and told them to move on. That concluded DOJ's witness list, but DOJ said they would bring back some of their witnesses to rebut Aetna and Humana. 

 

  • Humana CEO Bruce Broussard claimed that Humana greatly cares about its customers and wants to move away from fee-for-service toward value-based care. He also stated ACOs were becoming increasingly prominent and making Medicare more efficient and more like Medicare Advantage (MA). Additionally, he said providers were entering MA to compete, so competition was robust. 

 

  • Broussard also argued that the exchanges were failing and the MLR and rate review would protect consumers after the merger was finished. DOJ then pulled up emails where he said "the barriers to entry into the business has considerably increased." Bruce claimed this was out of context and only applied to certain situations. 

 

  • In response to DOJ's questions, he kept repeating that traditional Medicare was a competitor with MA, and that other companies offered vigorous products that competed with Humana's products.

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