Aetna and Humana are one step closer to merging after approval from the California Department of Managed Health Care (DMHC).
The merger will affect about 1.5 million people currently enrolled in health plans through the two insurers.
This is the third health insurance merger the department has approved. In March, the agency approved the proposed merger of Centene and Health Net. In October, they approved the proposed merger of Blue Cross Blue Shield and Care First.
Shelley Rouillard, director of DMHC, says the primary focus of the merger is to ensure consumer protections and Aetna's compliance with all financial requirements.
"Through this merger we also negotiated a number of conditions that will improve access to health care, help control health care costs and improve quality of care for the enrollees in these plans," she says.
Under the merger, Aetna will have to fulfill a set of negotiated commitments, or undertakings.
Aetna has agreed to keep HMO small group premium rate increases to a minimum and to increased oversight in the DMHC rate review program; keep key functions and operations in the state; and improve quality of care measured through rating and oversight programs under the National Committee for Quality Assurance and Office of the Patient Advocate.
Aetna has also agreed to invest $48.5 million over the next three years to educate at-risk populations on their health care rights; increase access to care for low-income and underserved communities; and improve California's health care infrastructure.
Consumer Watchdog, a non-profit that advocates for consumer interests, urged the U.S. Department of Justice to reject the proposed merger saying the approval allows unjustifiable rate increases that wouldn't result in savings for consumers.
Last week, California Insurance Commissioner Dave Jones recommended the U.S. Department of Justice block the proposed merger of Anthem and Cigna. Jones says the merger would reduce competition, increase prices and decrease quality of care.
DMHC is currently reviewing the proposed merger of Anthem and Cigna.