U.S. files suits against insurance megamergers
- The U.S. has filed suits to block the mergers of insurers of Anthem/Cigna and Humana/Aetna.
- Joining the U.S. in the Anthem/Cigna suit are 10 states, the Commonwealth of Virginia, and the District of Columbia, whereas the Humana/Aetna suit includes six states, the Commonwealth of Pennsylvania, the Commonwealth of Virginia, and D.C.
- California and Connecticut are among those involved in the lawsuit against Anthem/Cigna and had storied histories with the pending merger.
- In response, Cigna remarked, "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."
The idea of the two pending megamergers has always gone against the idea of market competition. Both of the pending mergers would reduce the number of major national health insurers from five to three.
The Anthem and Cigna merger would create a carrier giant with more than 53 million members have raised concerns about less choice and higher premiums. Though rumors have been circling that Aetna has been planning to sell Medicare Advantage assets to ease antitrust concerns, the Humana/Aetna merger could dominate the MA market with 4.5 million policyholders.
In the Anthem/Cigna complaint, DOJ cited "Anthem's purchase would eliminate it as a competitive threat and substantially lessen competition in numerous markets around the country. The harm to competition in any one of these markets is sufficient to enjoin the transaction."
In a statement, Anthem stated, "Today’s action by the Department of Justice is an unfortunate and misguided step backwards for access to affordable healthcare for America," adding, "Anthem is fully committed to challenging the DOJ’s decision in court but will remain receptive to any efforts to reach a settlement with the DOJ that will allow us to complete the transaction and deliver its benefits at a critical time when American consumers are seeking high quality healthcare services with greater value at less cost."
The carrier may want to huddle with its merger counterpart though. A statement from Cigna on Thursday remarked, "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."
Anthem isn't the only insurer with some fight in it. Both Humana and Aetna said they would "vigorously defend the companies' pending merger" in response to DOJ's suit.
Out of the two pending insurance megamergers, the Cigna/Anthem deal was always been a tougher sell for regulators. In particular, California Insurance Commissioner Dave Jones has pleaded with the DOJ to block the merger.
Journalists were abuzz as the news was breaking and as Loretta Lynch, U.S. Attorney General, addressed the suits in a press conference:
Loretta Lynch on big healthcare mergers: "Not only would the bank accounts of American people suffer, but the American people themselves"— Adam Cancryn (@adamcancryn) July 21, 2016
These mergers could increase insurer profits but at the expense of consumers, employers, and health professionals across the country, Lynch said.
Principal Deputy Associate Attorney General Bill Baer stated the agency's investigations show Aetna's acquisition of Humana would hurt seniors that rely on Medicare Advantage.
In reponse to proposed remedies from the insurers including divestitures to smaller market players, Baer added the proposed remedies have been impractical, incomplete and are unlikely to assuage the competition concerns.
- Bloomberg Anthem, Cigna Sued by U.S. Seeking to Block Insurer Mergers
- Healthcare Dive What's driving the big health insurance mergers?
- Healthcare Dive Healthcare payer mergers: Pros & cons
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