July 21, 2016
3 min read

DOJ sues to block mergers between Anthem and Cigna, Aetna and Humana

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The U.S. Department of Justice, along with attorneys general from Washington, D.C., and several states, sued to block Aetna's acquisition of Humana and Anthem's acquisition of Cigna, according to a press release.

The agency alleged that "the transactions would increase concentration and harm competition across the country, reducing from five to three the number of large, national health insurers in the nation."

The two mergers, valued at $37 billion and $54 billion, respectively, would limit competition, reduce benefits, decrease incentives and lower quality of care, the DOJ said in its challenges.

“Competitive insurance markets are essential to providing Americans the affordable and high-quality health care they deserve,” Loretta E. Lynch, attorney general, said in the release. “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 health care for all Americans.”

“We all, including seniors, everyday workers and the previously uninsured and underinsured, deserve affordable health insurance options,” Bill Baer, principal deputy associate attorney general, said in the release. “Competition today drives these four successful firms to fight to give us affordable options. There is no reason to put that dynamic at risk and that is why we are asking the court to stop these mergers and keep competition working for the benefit of the American consumer.”

Both the AMA and the American College of Physicians (ACP) issued statements of support regarding the decision.

Andrew W. Gurman, MD, president of the AMA, applauded the DOJ "for fighting to protect patients and physicians."

He extended the AMA's support of the antitrust challenge, noting that reducing the number of national health insurance carriers from five to three is "unacceptable."

"Today's action by the DOJ acknowledges the AMA's concern that patients' interests can be harmed when big insurers acquire rivals and develop strangleholds on local markets," Gurman said in the release. "Allowing commercial health insurers to become too big and exert control over the delivery of health care would be bad for patients and vitality of the nation's health care system. With existing competition in health insurance markets already at alarmingly low levels, federal officials have a strong obligation to enforce antitrust laws that prohibit harmful mergers and foster a more competitive market place that will operate in the patients' best interests."

ACP president Nitin S. Damle, MD, MS, FACP, said that the organization had previously voiced concerns about the merger and welcomed the decision, "which will encourage continued quality care of patients and a fair practice environment for physicians in diverse communities across the country."

"As a practicing primary care internist myself, I am relieved that the DOJ will block Aetna's acquisition of Humana and Anthem's takeover of Cigna," he said in the release. "These deals would result in higher prices and less competition and ultimately result in a strain on patients, both in their choice of insurance provider and in the cost that would be passed on to them."

Anthem and Aetna both released statements detailing their plans to fight the decision.

Aetna and Humana plan to "vigorously defend" their merger, which they said "is in the best interest of consumers, particularly seniors seeking affordable, high-quality Medicare Advantage plans."

The companies reported that the merger would lead to increased Medicare options, better quality, decreased costs and new products, tools and services for consumers.

"A combined company will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers," they said in the release. "Aetna and Humana look forward to making this clear in court, where a judge will review the transaction based on its merits."

Anthem, citing its "unwavering commitment to enhancing access to affordable health care," said that it will challenge the decision in court.

"Today’s action by the DOJ is an unfortunate and misguided step backwards for access to affordable health care for America," the company said in the release. "Access to health insurance saves lives, improves health and reduces the cost of care for all Americans. 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." – by Chelsea Frajerman Pardes