Florida insurance regulators have approved Aetna's acquisition of Humana's affiliates there, but with conditions, according to a consent order issued last week.
Aetna must expand operations in underserved counties, and will also be required to increase competition in Florida markets by broadening operations on the federally facilitated marketplace into five new counties by 2018. Finally, they must provide a plan for statewide expansion by 2020, according to the order.
Aetna and Humana shareholders approved the proposed acquisition in October 2015.
The Feb. 11 consent order by the Florida Office of Insurance Regulation approves Aetna's application to acquire 100 percent 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 order was based on a filing by Aetna, and a hearing held on December 7.
The order said 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 required Aetna to expand into underserved counties and to broaden Affordable Care Act marketplace plans.
The financial strength of Aetna's Florida-based HMOs must be increased by requiring compliance with risk-based capital standards, the order said.
Aetna also agreed to maintain fair treatment of individuals living with HIV, according to the consent order.
A report by an economist for the insurance regulator found the majority of geographic and product markets identified are already characterized as either moderately or highly concentrated before consideration of the proposed acquisition.
The order also warned that divestiture, the common wisdom that applied in antitrust cases whereby companies divest some of their business to competitors to avoid lack of competition, would not be in the best interest of policyholders because of the potential disruption in quality of services, benefits, networks, and cost-sharing provisions.
"Divestiture may force policyholders to replace their chosen providers in order to remain in-network and may also result in unwanted changes in quality of services, benefits, and the cost-sharing structure of their plan," the consent order said.
Aetna's proposed $37 billion deal to acquire Humana, as well as Anthem's proposed $54 billion deal to take over Cigna, are currently under federal review by the U.S. Department of Justice.
Despite Florida's heavy Medicare population, 19 percent of residents, a statement by the Florida Office of Insurance Regulation cautions observers not to expect the ruling to signal a bellwether for rest of the nation.
"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," the Florida Office of Insurance Regulation said in a released statement.
Perhaps surprisingly, Florida's high concentration of Medicare beneficiaries is eclipsed by both Maine and West Virginia, at 21 percent each, according to a Kaiser report.