Antitrust regulators, though, fear that the combined companies might not be in the best interests of American consumers.
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In a statement, Connecticut-based Aetna said there is robust competition in Medicarec and that they will vigorously defend their proposed merger. Moreover, they opined that the Medicare market already faces a lot of competition, which includes coverage option provided directly by the government.
The Justice Department has officially filed suit against the Anthem-Cigna and Aetna Humana mergers, challenging a pair of deals that would have narrowed the five largest USA health insurers down to three. “The department will continue to work with our state colleagues to protect competition and innovation in this vitally important industry”.
Eleven states – California, Colorado, Connecticut, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee and Virginia – and the District of Columbia hitched wagons to the department’s challenge of Anthem’s $54 billion acquisition of Cigna. Principal Deputy Attorney General Bill Baer said that Humana and the other insurers are continuing to profit and the merger would only sweeten the deal for them. Aetna’s merger with Humana would lead to an overall revenue of $115bn based on 2015 estimates. Still, the Aetna-Humana deal could be defended as is, he said, if they are willing to make the necessary divestitures.
For the past several years, the administration has leaned heavily on insurers to help implement the 2010 health law, often called Obamacare. “Competition among insurance companies like Anthem and Cigna ensures that employers and individuals can purchase high-quality policies at affordable prices”. The $34-billion merger will create the biggest seller of Medicare Advantage plans, and will churn out revenues of nearly $115 billion each year. Government officials are concerned about the proposed mergers’ effect on consumers. “Most consumers are covered by insurance plans that their employers choose and negotiate with companies like Anthem and Cigna”.
Proponents of health-insurance mergers argue that they can actually people money, because they give insurance companies more bargaining clout when negotiating prices with hospitals and drug companies.
As previously reported, Anthem wants government approval of its $48 billion takeover of Cigna Corp.
A Cigna statement issued Thursday morning said the company “is now evaluating its options consistent with its obligations under the agreement” it originally made with Anthem. Cigna said, “We do not believe the transaction will close in 2016, and the earliest it could close is 2017, if at all”. “And competition would be substantially reduced for hundreds of thousands of families and individuals who buy insurance on the public exchanges established under the Affordable Care Act”, said Lynch.
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Even so, the health insurers vowed to fight the lawsuit.
