Across the health care sector, mergers tend to drive up costs for consumers and businesses, as well as contribute to rising income inequality.
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“Most consumers are covered by insurance plans that their employers choose and negotiate with companies like Anthem and Cigna”.
“If the big five were to become the big three, not only would the bank accounts of the American people suffer, but the American people themselves”, Lynch said.
The companies have argued that the mergers would give them greater power to bargain lower prices with doctors, hospitals and drug providers, so they could cut costs to consumers.
“Affordable, quality health care is essential to the well-being of all Americans”, Schneiderman said in a statement. “The DOJ’s action is based on a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated healthcare landscape and is inconsistent with the way that the DOJ has reviewed past healthcare transactions”.
Cigna said it is now evaluating its options, “given the nature of the concerns raised by the DOJ and the overall status of the regulatory process”.
The news comes as little surprise, as in recent meetings with the leaders of Aetna and Humana, as well as Anthem and Cigna, antitrust officials have expressed doubts that the companies could offer adequate remedies to concerns about the mergers’ effect on competition. 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. And competition is critical for doctors and hospitals who obtain access to most of their commercial health-insurance patients by contracting with insurers to be “in-network” providers. Several state attorneys general are named as plaintiffs in both suits. Humana dropped 3.9 percent to $153.38 at the close in NY and Cigna fell 2.1 percent to $130.30. “Let’s look at Anthem’s purchase of Cigna…” Electrolux and Halliburton later abandoned those deals. Another analyst echoed that sentiment.
“If these insurance giants were allowed to merge, they would have too much control over what our health care choices would be”, the consumer organization said.
Aetna and Anthem had each proposed asset sales to the regulators, but they did not create strong enough competitors and they did not solve the issues, Baer said.
Aetna and Humana quickly announced that they would fight the lawsuits. National Public Radio reports that U.S. Attorney General Loretta Lynch explained the decision at a press conference: “If allowed to proceed, these mergers would fundamentally reshape the health insurance industry”. “Notably, many insurance departments across the country have approved these mergers”. “This competition benefits Americans who can least afford health insurance”, the complaint states.
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The largest insurer of all, UnitedHealth Group, has announced it would not continue to take part because it was not making money on it. However, its individual insurance business remains “challenging”. At mid-day Thursday, Humana stock reached $168.50 per share, the highest it’s been since early July.
