A key California regulator has endorsed the proposed $37 billion merger of Aetna and Humana, saying that the new company should be able to operate in the Golden State without posing a serious risk to consumers.
Shelley Rouillard, director of the California Department of Managed Health Care, announced on Monday that her decision to approve the proposed merger came after Aetna promised to limit its premium increases in the small group insurance market and to allow state regulators greater oversight of its operations, reports the Los Angeles Times.
Aetna also pledged to spend over $50 million towards improvements to a service center in Fresno and other health initiatives sought by the state.
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The decision comes only a week after another top state official, Insurance Commissioner Dave Jones, urged the federal Department of Justice to block the proposed merger of Anthem and Cigna, presenting evidence that the merger would leave large segments of the state with very little competition among health insurers.
Jones's denunciation of the $48 billion deal was seen as a key development by industry insiders who await a decision from the federal government because of California's size in terms of its population and economy.
Jones still hasn't made an announcement on the Aetna-Humana merger. It is possible that his finding might conflict with that of Rouillard.
The Aetna-Humana deal may face fewer obstacles because of its size, as well as the markets it affects. Aetna is pursuing Humana largely because of Humana's Medicare Advantage business.
The Aetna-Humana merger has nevertheless faced obstacles, most recently from the Missouri insurance commissioner, who announced last month that the state would bar the companies from selling certain types of insurance if the deal goes through, citing the dominance of the two companies in certain insurance markets, including Medicare Advantage.
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