The worry about competition, and what fewer insurers could mean for companies and people who are covered by the plans, is heightened by another proposed merger between Humana and Aetna – a deal valued at $37 billion.
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Baer said regulators were anxious about how the deals will affect competition in three areas in particular: coverage offered by large employers, insurance sold on the Affordable Care Act’s public exchanges and Medicare Advantage plans, which are privately run versions of the government’s Medicare program for the elderly.
The US government moved Thursday to prevent two mega-mergers in the health insurance industry, saying they would sharply reduce competition and harm millions of American consumers.
The Obama administration said Thursday it will seek legal action to block Indianapolis-based Anthem’s $48 billion acquisition of Cigna.
An Aetna spokesman said, “We don’t comment on rumours or speculation” but added the deal would do good for consumers and healthcare system as a whole.
Cigna noted that Anthem had led the regulatory process and said it is ” now evaluating its options consistent with its obligations under the agreement” with Anthem.
“It’s a big undertaking and given an uncertainty to how it would work or who the buyers would be you could understand why they took a firm stand”, Greaney said.
If the mergers go through, the AMA warned that the big insurers would “develop strangleholds on local markets” and “exert control over the delivery of health care”.
The planned merger between Aetna and Humana was announced a year ago, and the companies were quick to react after news of the Justice Department suit. It also alleges that the merger would reduce competition in the market for national plans sold to large employers covering employees throughout the country, including New Yorkers. “CSMS has expressed major concerns with giant health insurers becoming goliaths with exclusive or near-exclusive power to dictate price and care delivery to the detriment of patient medical care”. “Anthem’s effort to buy Cigna affects both price competition and quality competition”.
The decision by the Citizens Ethics Advisory Board came shortly after the U.S. Justice Department announced it was suing to stop the proposed merger, prompting the state Department of Insurance to announce it was suspending its assessment of Anthem’s financial condition and corporate governance.
If the health insurers decide to fight the lawsuits, Bloomberg reports that it would likely take months to resolve. Without the merger, the Justice Department said Cigna could double its size in the next seven to eight years.
Anthem said the DOJ’s response was an “unfortunate and misguided step backwards for access to affordable healthcare for America”.
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In a separate release, Cigna, the nation’s fourth-largest health insurer, said it was “evaluating its options consistent with its obligations under the agreement”.
