A merger “O.K.” with a slight delay

Not to be outdone by the Cigna-Express Scripts merger, CVS Health and Aetna’s proposed merger has been approved by the US Justice Department. The $69B (nice) deal combines Aetna’s insurance skills with CVS’s drug benefits management and nearly 10,000 pharmacy locations to create a healthcare behemoth. The deal will allow Aetna customers to seek less expensive medical services at those pharmacy locations, including CVS’s 1,000+ walk-in clinics which have served 25M patients since 2000.  To get the deal approved, Aetna had to sell all its standalone Medicare Part D plans. Otherwise, the merged company would have owned 30 percent of those drug plans—an unacceptable share to the DOJ. We’ll be interested to see how the new company competes with the similarly structured Cigna-Express Scripts in the coming years.

A merger “O.K.” with little delay

Cigna and Express Scripts have received their parents’ the Justice Department’s blessing to go ahead with their wedding merger. The health insurer and pharmacy benefit manager say they’re a good fit for each other since they’ll be able to share information about their customers’ medical expenses that will help them manage patient health better. But the announcement has got to sting a bit for CVS Health and Aetna, who have been waiting on DOJ approval for their merger since before the Cigna-Express Scripts deal was announced. Visual/meme representation of that here. You’ve gotta think that Amazon’s ever-threatening encroachment into the healthcare industry is driving some of these vertical mergers between health insurers and PBMs.

Aetna mails it in

Sometimes an envelope and poorly thought out patient privacy procedures are all you need for a data breach, as Aetna discovered last summer. The insurance company was, no joke, sending out letters in response to a previous privacy violation, notifying patients who took the HIV preventative PrEP about changes to ordering the medication. So they put this information in an envelope with a nice, oversized window where you can see the patient’s name and a reference to HIV prescriptions. That’s a patient privacy nightmare for any condition, and it’s made worse due to the stigma still surrounding the virus.  Aetna agreed to pay $17M to the patients last Wednesday, which will presumably come in the form of checks with the memo “We’re sorry about telling everyone about your HIV status.”

Brother, can you spare 770 billion dimes?

CVS Health is going to need a few more dimes than the guys in Blazing Saddles. Why? Because CVS agreed to buy Aetna insurance for $77B. Apparently CVS wants to win the contest for the longest press release title ever: “CVS Health to Acquire Aetna; Combination to Provide Consumers with a Better Experience, Reduced Costs and Improved Access to Health Care Experts in Homes and Communities Across the Country.” Why the merger? According to a Reuters article, “Expanding the (CVS) clinics could eventually save the combined company more than $1B annually by substituting low-cost treatments in CVS stores for more expensive hospital visits.” While the impact on patients is unknown, remember CVS stopped selling tobacco products in 2014, so we’re saying there’s a chance this is a good thing.

3. That time when avoiding antitrust created distrust

Insurance: taking the safe path that might cost you now, but will benefit you in the long run. Insurance company Aetna apparently tried the safe path to accomplish a “megamerger” with Humana by pulling out of ACA exchanges where the two were competing. According to Judge John D. Bates, who officially blocked the merger on Monday, Aetna pulled out of these markets not simply due to profit concerns, but to “improve its litigation position.” Turns out, as anyone with insurance could tell you, the safe path doesn’t always benefit you as much as you think it will. The blocked deal doesn’t bode well for the Anthem-Cigna merger, which has a larger price tag than the Aetna-Humana deal and is similarly stalled by the US Justice Department.

4. Aetna slashes Obamacare

Aetna is splitting up with 11 of its 15 Affordable Care Act insurance exchanges. These cuts come after other major insurers — UnitedHealth and Humana —announced similar plans. Insurers leaving the marketplace reduces competition, which, according to your high school Econ teacher, is bad news for consumers. Additionally, fewer insurers could undo some of the progress the ACA has made (Think: better access to care, lower out-of-pocket costs, and higher quality care). So why the pull-back? Some are hinting that it’s simple retribution but Aetna reported a $200 million loss from its individual insurance, citing lack of healthy people to balance out high-cost customers. And why aren’t healthy people buying on the exchanges? Ask your 20-something, self-employed cousin about premiums vs. the penalty fee. (Hint: one is *much* lower).

5. D.O.J. attempts break up of really dull party

The Justice Department filed a lawsuit to block two big insurance mergers, citing that reduced competition would be bad for consumers. In one deal, Aetna would buy Humana for $34 billion. In the other, Anthem would buy Cigna for $48 billion. These mergers would make a dent, reducing the number of mega insurance providers in the US from 5 to just 3. And even worse than a new insurance card, Justice is afraid your coverage could get a *lot* more expensive. Meanwhile, United, the only top 5 insurance company not invited to the party, is just chillin’, wondering who called the cops.