LOUISVILLE, Ky. (WDRB) -- Humana and Aetna said Tuesday that they have agreed to sell a portion of their respective Medicare Advantage businesses to California-based Molina Healthcare in a $117 million deal that the companies hope will pave the way for their $37 billion merger.
Molina would pick up about 290,000 Medicare Advantage members in 21 states where the U.S. Justice Department has said that Humana and Aetna's combination would have devastating effects on competition and choices available to seniors.
“We believe that these divestitures taken together would address the Department of Justice’s perceived competitive concerns regarding Medicare Advantage," Aetna CEO Mark Bertolini said in a news release. "We are confident in Molina’s ability to deliver continued access to quality care for our members in these areas.”
The sale to Molina, which is contingent on Aetna's purchase of Louisville-based Humana, represents about 6.5 percent of the two companies' combined Medicare Advantage business. The companies together have about 4.4 million enrollees in Medicare Advantage, according to the Kaiser Family Foundation.
William Baer, a top Justice Department official, said last month that it was hard to see how Humana and Aetna could allay the department's concerns by simply selling off some of their Medicare Advantage business.
"There are some mergers that can be saved through divestitures," Baer said on July 21. "We have nothing to suggest these can."
A Justice Department spokesman declined to comment on Tuesday.
Even if the department is not convinced to drop its opposition to the deal, the Molina agreement may help the companies convince a federal judge at trial that regulators are wrong about the merger's effect on competition.
"The companies remain committed to vigorously defending their pending transaction against a U.S. Department of Justice lawsuit seeking to block it," they said in the news release Tuesday. "Aetna and Humana remain confident that their transaction is in the best interest of consumers, particularly seniors who elect to seek Medicare coverage through affordable, high-quality Medicare Advantage plans."
The Medicare Advantage plans involved in the transactions include Aetna plans in Alabama, Arkansas, Florida, Georgia, Illinois, Louisiana, North Carolina, Nevada, Ohio, Oklahoma, Texas, Virginia and West Virginia; and Humana plans in Delaware, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, Pennsylvania, South Dakota and Utah.
Copyright 2016 WDRB News. All Rights Reserved.