Health insurer deals opposed
U. S. rejects Anthem’s proposed takeover ofCigna andAetna’s bid for Humana
U.S. antitrust enforcers roundly rejected a pair of proposed deals that would consolidate the nation’s five biggest health insurers into three.
The Justice Department on Thursday sued to block two separate tie-ups — Anthem’s $48 billion takeover of rival health insurer Cigna and Aetna’s $37 billion bid for Humana — saying the deals would raise health care costs and reduce choice for consumers.
“These mergers would fundamentally reshape the health insurance industry,” Attorney General Loretta Lynch said at a news conference in Washington. “They would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies” and restrict competition in key markets.
Three of the companies said they would fight the lawsuits, which could tie them up in months of litigation, dragging out deals that were announced about a year ago. Cigna said it was reviewing its options under the merger agreement, which contains language that may require it to defend a government challenge. The insurers could also agree to abandon the transactions, potentially sparking a round of new deals.
The lawsuits continue a string of merger challenges by antitrust enforcers looking to stop industry consolidation, dealing a blow to Anthem and Aetna’s bids to gain scale by snapping up rivals.
The actions underpin wider sentiment within President Barack Obama’s administration about the importance of protecting competition among health insurers.
By challenging the deals, the administration has seized another op- portunity to shape the future of health care — an effort to safeguard choice and affordable options for consumers — after passage of the Affordable Care Act.
Earlier this month, Obama wrote an essay for The Journal of the American Medical Association in which he emphasized the need for competition to keep health care affordable for consumers. Health and Human Services Secretary Sylvia Mathews Burwell, whose department is closely watching the deals because of their potential impact on the delivery of medical plans under the health care law, also highlighted the importance of competition in insurance markets.
Aetna and Humana said they will “vigorously” fight to complete their deal. Anthem said it’s ready for a court fight, but is also open to a settlement with the Justice Department.
“The DOJ’s action is based on a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated health care landscape and is inconsistent with the way that the DOJ has reviewed past health care transactions,” Anthem said.
If Anthem’s bid for Cigna falls apart under antitrust scrutiny, Cigna is owed $1.85 billion, according to the terms of their agreement. Aetna would owe Humana $1 billion should its takeover fail under a U.S. challenge.