Justice Department Moves To Block 2 Big Health Insurance Mergers
- Author: Wendy Palmer Jul 22, 2016,
Jul 22, 2016, 0:44
The Justice Department has officially filed suit against the Anthem-Cigna and Aetna Humana mergers, challenging a pair of deals that would have narrowed the five largest USA health insurers down to three.
U.S. Sen. Richard Blumenthal, D-Conn., a critic of the two deals, praised the Justice Department action.
Arguing that the deals would limit competition, the government hoped to stop the planned mergers of Aetna and Humana and of Anthem and Cigna.
He also said that allowing Aetna to acquire Humana would hurt seniors who have Medicare Plus. Aetna, based in CT, trails right behind Anthem, operating in every state to the tune of $60 billion in reported revenue. Merging the two companies would send premiums higher and increase administrative costs, according to state officials. "Our lawsuits aim to protect the many Americans who depend on these four health insurance companies for their coverage".
"Among other consequences, the number of health insurance options available to nationwide employers would shrink from four to three".
In April, then antitrust division chief Bill Baer said corporate leaders have shown too much "enthusiasm" for deals with "all that capital coming back into the marketplace".
The government's concerns echo a broader sentiment within the Obama administration that competition must be protected among health insurers in order to deliver quality health care to Americans.
Health insurance company mergers in the U.S. among four big players will be blocked by the Department of Justice citing anti-trust concerns and potential harm to consumers.
"In the counties surrounding St. Louis, Cigna and Anthem are the second- and third-largest insurers on the public exchange".
In a statement Thursday, Cigna said it was evaluating its options and did not expect the deal to close soon, "if at all".
The company added, "In light of the DOJ's decision, we do not believe the transaction will close in 2016 and the earliest it could close is 2017, if at all".
Shortly after the DOJ announcement, Humana said "together with Aetna", the company intends to "vigorously defend" the merger transaction, as reported by Reuters. The company called the lawsuit "unfortunate and misguided step backwards for access to affordable healthcare for America". The government is concerned about the so-called "Big Five" becoming the "Big Three".
Antitrust enforcers have won most of the cases they have brought in recent years, though there have been occasional setbacks, including court rulings that went against Federal Trade Commission challenges to hospital mergers.
The lawsuit to block the merger between Anthem-Cigna and Humana-Aetna has support from 9 states and the District of Columbia.
Missouri Attorney General Chris Koster could not immediately be reached for comment.
If the Anthem-Cigna merger ultimately fails, smaller insurers could become targets for Cigna, including WellCare Health Plans Inc., Centene Corp. and Molina Healthcare Inc.