Skip to main content

AHA Urges DOJ to Scrutinize Centene-WellCare Merger

Analysis  |  By Steven Porter  
   May 01, 2019

The deal threatens to reduce competition for 'tens of millions of consumers across broad swaths of the country,' the hospital lobbying group said.

In a letter to the U.S. Department of Justice released publicly Wednesday, the American Hospital Association urged antitrust regulators to investigate Centene Corp.'s proposed acquisition of WellCare Health Plans.

The AHA said the Centene-WellCare merger could undermine competition in Medicaid Managed Care and Medicare Advantage for "tens of millions of consumers across broad swaths of the country."

The planned acquisition, valued at $17.3 billion, doubles down on Centene's business strategy of growth through government-backed health insurance. Despite renewed chatter of a potential replacement for the Affordable Care Act, Centene CEO Michael Niedorff expressed confidence in the face of what he called mere "headline volatility."

But the AHA letter states that Niedorff has himself acknowledged some anticompetitive effects embedded in the current merger plans as it pertains to two states: Nebraska and Missouri. And the letter argues other states are likely to suffer from the deal as well.

The arrangement is especially troubling since more than 857,000 seniors are enrolled in MA plans operated by Centene and WellCare, the AHA letter states.

"The deal would not only eliminate current competition between them in the MA market, it also would eliminate the possibility of future competition between them," the letter states.

This comes after Centene and WellCare had competed against each other to purchase Aetna's MA plans in 2016, when Aetna had sought to acquire Humana, as Reuters' Carl O'Donnell and Caroline Humer reported at the time. The AHA cited the 2016 example as evidence that Centene and WellCare are competing for some of the same consumers.

"There is no service more important to American consumers than health care, and vigorous competition among health insurance companies is necessary to ensure that consumers receive high quality at affordable rates," the AHA wrote. "The facts show that the We1lCare-Centene transaction is likely to significantly reduce competition and will therefore harm the most vulnerable Americans. DOJ should vigorously review this transaction's effects on current and future competition and take all appropriate measures to protect U.S. consumers."

Spokespeople for Centene and WellCare could not immediately be reached for comment Wednesday.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Each company is a major player in the market for government-sponsored health plans.

The hospital lobbying group argues the proposed merger would undermine competition.

Centene and WellCare reportedly offered competing bids for Aetna assets in 2016.


Get the latest on healthcare leadership in your inbox.