US court blocks $54 billion Anthem-Cigna merger
Federal court ruling derails an unprecedented effort to consolidate the country’s health insurance industry
WASHINGTON: A federal judge ruled against US health insurer Anthem Inc’s proposed $54 billion merger with smaller rival Cigna Corp, derailing an unprecedented effort to consolidate the country’s health insurance industry.
The US Justice Department sued in July to stop Anthem’s purchase of Cigna, a deal that would have created the largest US health insurer by membership, and Aetna Inc’s planned $33 billion acquisition of Humana.
The merger would have worsened an already highly concentrated market and is likely to raise prices, Judge Amy Berman Jackson of the US District Court for the District of Columbia said while issuing the ruling against Anthem’s deal.
Last month, a different US judge ruled against Aetna’s proposed deal for Humana.
Government antitrust officials argued that both deals would lead to less competition and higher prices for Americans. The acquisitions would have reduced the number of large national US insurers from five to three.
Jackson had separated the Justice Department’s case into two trials. Her ruling focused only on the first one in which the Justice Department argued that the tie-up would hurt the ability of large national employers to get competitive rates for the health coverage they provide workers.
The second trial considered overlaps in the two insurers’ business selling health benefits to individuals, and administering Medicare Advantage coverage to the elderly.
Anthem argued that there was enough competition because large companies with more than 5,000 employees often used multiple smaller players in the national market, but the judge disagreed.
“Regional firms and new specialized ‘niche’ companies that lack a national network are not viable options for the vast majority of national accounts, and they will not ameliorate the anticompetitive effects of this merger,” Jackson wrote.
Cigna intends to carefully review the opinion and evaluate its options in accordance with the merger agreement, it said in a statement.
An Anthem spokeswoman declined to comment on the matter. PROTECTING CONSUMERS Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division said the ruling had prevented American consumers from facing higher health insurance premiums and less innovation.
Bill Baer, who was head of the Justice Department’s antitrust division when it decided to sue to block both the insurance deals but has since left the agency, also hailed the decision. “Together with the decision on Aetna and Humana, this preserves five large national providers of critically important health insurance products,” he said.
The fifth player, UnitedHealth Group Inc was not involved in the deals.
Some Wall Street analysts expect all four of the companies to now move on, although Aetna and Humana have not committed to doing so. Their deal expires February 15.
“The likelihood of success in an appeal would be very low,” said Matthew L Cantor, a partner in the law firm of Constantine Cannon in New York.