Competition among Medicare Advantage plans might only be on the minds of seniors during open enrollment, but adequacy of competition could strike a dagger through one or more of the mega-mergers among national health insurers.

The Jan. 23 ruling from U.S. District Judge John D. Bates blocked the merger of Aetna and Humana, and could have major implications for the Anthem-Cigna merger. But the Justice Departments arguments about the Medicare Advantage market ultimately led to the ruling.

The decision dwelt on the merger’s impact on the Medicare Advantage market. The Justice Department case targeted loss of competition in 364 counties in 21 states. The combined company would gain strength in negotiation with providers, and could promote more restrictive networks. Planned divestitures to Molina Healthcare were not deemed insubstantial.

Without divestures, the combined Aetna-Humana merger would have outsized influence in most markets, challenged only by UnitedHealthcare. UnitedHealth and Humana already go head-to-head in beneficiary-rich markets like Miami and Chicago. A merged Aetna-Humana would vault past UnitedHealth, not to mention smaller national plans like Molina and any number of regional plans. In the stand-alone Part D market, a combined Aetna-Humana also would outpace UnitedHealth by more than 1 million beneficiaries.

Those are just the margins in Medicare Advantage today. More Medicare beneficiaries are comfortable with managed care, and those members gravitate toward Medicare Advantage plans.

The program encompasses almost one-third of all Medicare beneficiaries. While that growth rate has slowed down, expect Medicare Advantage growth to pick up again under the Trump administration through both a loosening of regulations and great emphasis on the program. MA has bipartisan support and more Americans who age into Medicare are comfortable with managed care and will opt for MA plans.

The bargaining power of the combined company could force out smaller plans and could lead to narrower networks and potentially higher premiums. Zero premium plans still have significant draw among Medicare Advantage members but fewer MA players always means fewer plan options.

The Aetna-Humana case presents ominous signs for the proposed union of Anthem and Cigna, which also awaits a court ruling. Aetna-Humana always appeared a less problematic merger than Anthem and Cigna. If Aetna-Humana cannot clear legal hurdles, odds dim for Anthem-Cigna. However, neither plays in Medicare Advantage to the level of Humana or Aetna.

This isn’t the end for either case. Aetna and Humana are likely to appeal and could face more favorable territory in another court. The Justice Department is also about to undergo a major policy shift under attorney general-designate Jeff Sessions, which present few obstacles for future mergers of large insurers.

For the moment, Medicare Advantage markets won’t see any reduction in plan options and providers won’t face negotiations with the combined company.

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