John Molina, the CFO of Molina Healthcare, faced intense questioning yesterday from a Justice Department lawyer concerning the proposed $34 billion merger of Aetna and Humana. In order to make the deal more acceptable to the Justice Department, which is trying to block it on antitrust grounds, Aetna and Human said they would sell $117 million of its assets to Molina, according to the Wall Street Journal. Those assets would bring about 290,000 Medicare beneficiaries in 21 states into the Molina fold. The move would also broaden Molina’s market reach, as the company is now primarily a managed Medicaid supplier.
Molina agreed to the deal, but not without a lot of corporate soul-searching, as Justice Department lawyer Ryan Kantor pointed out to John Molina. He produced documents showing the internal back-and-forth among Molina Healthcare’s executives. In one, John Molina admitted that his company lacked the manpower and experience needed to run Medicare plans. In another, he worried that Aetna would keep the better-performing Medicare Advantage plans for itself.
The WSJ reports that one board member “wondered how the company’s newly acquired enrollees would feel about transitioning from Aetna ‘to a relatively unknown Molina.’ Mr. Molina wrote back in response, ‘We have built in a 10% decline in membership for that very reason.’”
Source: Wall Street Journal