Justice Department and State Attorneys General Sue to Block Anthem’s Acquisition of Cigna, Aetna’s Acquisition of Humana

July 21, 2016

 

The Justice Department and State Attorneys General from multiple states and the District of Columbia sued today to block Anthem’s proposed acquisition of Cigna and Aetna’s proposed acquisition of Humana. They stated that these mergers, valued at $54 billion and $37 billion, would increase concentration and harm competition and consumers across the country. Eleven states and the District of Columbia joined the challenge to the Anthem-Cigna merger, and eight states and the District of Columbia joined the challenge to the Aetna-Humana merger.

 

In a press conference, U.S. Attorney General Loretta Lynch stated these lawsuits were a major step in DOJ’s work to protect consumers. She told reporters, “These mergers would restrict competition for health insurance products sold in markets across the country and would give tremendous power over the nation’s health insurance industry to just three large companies, Our actions seek to preserve competition that keeps premiums down and drives insurers to collaborate with doctors and hospitals to provide better healthcare for all Americans.”

 

Principal Deputy Associate Attorney General Bill Baer added that these mergers were unprecedented in their size and scope, and that they put the entire health care system, threatening to increase premiums and reduce healthcare access and innovation. He noted that the insurers are already very profitable and that these deals would eliminate the competition that benefits consumers. Baer pointed out that Anthem has had compete with Cigna’s innovation over the last few years by keeping its prices down and offering better products, and the merger will destroy that competition. Additionally, Aetna and Humana compete for consumers in Medicare Advantage which results in lower costs, and that merger would get rid of those benefits. Furthermore, seniors would be the ones harmed by the merger, and they would face higher premiums, less competition and choice, and lower quality. In response to questions, Baer said DOJ had seen absolutely nothing to suggest that any remedies could fix the mergers.

 

Deputy Assistant Attorney General Sonia Pfaffenroth finished with the statement that “the proposed mergers would eliminate two innovative competitors—Cigna and Humana—at a time when competition has been pressuring insurers to develop new models of care designed to keep Americans healthier, to deliver healthcare more efficiently and to control the costs of providing care.”

 

The suit against Anthem and Cigna states that their merger would reduce competition for millions of consumers who receive coverage through their employers, from large-group employers in at least 45 metropolitan areas, and from public exchanges in St. Louis and Delaware. The acquisition of Cigna also threatens competition among commercial insurers for the purchase of healthcare services from healthcare providers. The suit against Aetna and Humana states that their merger would greatly reduce Medicare Advantage competition in over 350 counties across 21 states, impacting over 1.5 million Medicare Advantage members. Also, the deal would harm competition to sell commercial health insurance to individuals and families on the public exchanges in Florida, Georgia, and Missouri, hurting over 700,000 people.

 

We applaud DOJ’s decision to block both mergers. DOJ recognized that when health insurers merger, consumers pay the price. The merging companies could not even providing convincing evidence of how the mergers would benefit consumers. In the future, they should focus on providing better service and lower prices, instead of trying to sneak anticompetitive mergers past antitrust regulators.

 

We stand ready to support DOJ in its actions and to keep educating the public about the importance of competition.

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