Department of Justice Will Likely Seek to Block Anthem-Cigna, Aetna-Humana Mergers

July 20, 2016

 

 

The Department of Justice is allegedly preparing lawsuits to block the proposed health insurance mergers of Anthem and Cigna and Aetna and Humana, according to multiple sources and news reports.

 

Antitrust officials believe that Anthem’s $48 billion acquisition of Cigna and Aetna’s $37 billion acquisition of Humana will greatly harm competition. Offers by the companies to sell assets are unlikely to persuade the officials otherwise. The sources spoke on the condition of anonymity because the lawsuits have not yet been filed. Anthem, Cigna, and Humana declined to comment, and a spokesperson for Aetna also said they didn’t comment on rumors, but that they believed the merger would benefit consumers and the overall health care system.

 

The Justice Department’s final decision is expected this week or next week at the latest.

 

If Anthem and Cigna and Aetna and Humana combine forces, the number of major national health insurers would decrease from five to three. Consumer advocates, healthcare providers, unions, and employers criticized the mergers, saying they would only benefit shareholders and hurt competition and consumers by driving up healthcare costs. They observed that in the past mergers led to higher premiums for consumers and little or no benefits, and that entry into health insurance markets by new firms is very difficult.

 

If these mergers fail, Anthem is required to pay a $1.85 billion breakup fee to Cigna and Aetna would have to pay a $1 billion fee to Humana. The companies could choose to fight any lawsuits in court; Aetna and Humana are more likely to pursue this course than Anthem and Cigna.

 

This news is an excellent sign that DOJ is ready to stop these anticompetitive mergers and stand up for consumer interests. We hope that DOJ will follow through on their concerns and take action to protect competition in health insurance.

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