Insurance industry awaits merger rulings

The future of the health insurance market may become clearer as trials on two major mergers wind down.

Anthem is proposing a $54.2 billion takeover of Cigna Corp. while Aetna is attempting a $37 billion merger with Humana. The government has sued to stop both deals, arguing competition would be reduced, resulting in higher prices, lower quality care and fewer choices for consumers. Anthem maintains that its takeover of Cigna would lead to more innovative care models and lower costs for patients.

Tim Greaney, co-director of the Center for Health Law Studies at St. Louis University, said the government has done a good job of making its core argument in the Anthem trial and has sewn doubt that the insurers’ could provide better and less expensive services by working together, as both claim.

A source with Anthem, speaking on background, said he thought the ruling could go either way.

Whether Medicare Advantage competes with Medicare’s traditional fee-for-service program is the big question in the Aetna trial. The government maintains that the two are separate markets while Aetna lawyers argue that the CMS regulates them as functional substitutes.

The judge for that trial, U.S. District Judge John Bates, must attempt to predict the future of the markets as he considers his ruling. If the judge rules against the insurance companies, they will have to decide whether to appeal the decision or attempt to work with the new administration of President-elect Donald Trump.

Cigna and Humana would receive payments if their respective mergers fall through. Aetna would pay Humana $1 billion and Cigna would get $1.85 billion from Anthem.

Whether Medicare Advantage competes with Medicare’s traditional fee-for-service program is the big question in the Aetna trial.