A Market All Its Own: Medicare Advantage as a Separate Product Market in the DOJ’s Case against the Aetna-Humana Merger

Douglas Ross and David Maas

A chapter in Healthcare Antitrust, Settlements, and the Federal Trade Commission, 2018, vol. 28, pp 123-141 from Emerald Group Publishing Limited

Abstract: This chapter assesses the doctrine of reasonable interchangeability through the lens of the US Department of Justice’s (DOJ’s) successful effort to enjoin the megamerger of two of the largest national insurance companies, Aetna and Humana. The DOJ focused its challenge on the companies’ Medicare Advantage business, arguing that it is a separate product market from original Medicare and the merger would substantially reduce competition in the market for Medicare Advantage in many geographic markets across the country. The case turned on whether there was reasonable interchangeability between original Medicare and Medicare Advantage in the eyes of consumers. The judge relied on both practical indicia of interchangeability, including evidence of how likely Medicare beneficiaries were to switch between Medicare Advantage and Original Medicare, along with econometric evidence. The decision provides a useful roadmap of how a knowledgeable judge reviewing a merger will consider bothBrown Shoefactors and econometric evidence in assessing reasonable interchangeability.

Keywords: Antitrust; product markets; interchangeability; mergers; health insurance; K210; L400; L410 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rlwezz:s0193-589520180000028004

DOI: 10.1108/S0193-589520180000028004

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