The U.S. Department of Justice, 11 states and the District of Columbia filed a lawsuit Thursday seeking the stop the merger.
Advertisement
Anthem’s deal with Connecticut-based Cigna had been in the works for more than a year. But any concerns were trumped by the fact that Medicare Advantage customers “are not confined to remain in a Medicare Advantage plan, and may choose to return to Traditional Medicare if they were to become dissatisfied with their Medicare Advantage plan in the future”, Dowling’s order said.
Aetna Inc. proposed last summer to buy Humana Inc. for $34 billion, while Anthem Inc. moved to acquire Cigna Corp. for $48 billion. Earlier this month, when news broke that the DOJ was seriously questioning the merger, Humana’s stock plummeted.
In the litigation, the Justice Department described Anthem as having a reputation for having “poor customer service” and “being hard to work with”, while it said Cigna has “highly regarded customer services” and that it “works closely with doctors and hospitals”.
Anthem, based in Indianapolis, called the action “an unfortunate and misguided step backwards for access to affordable health care for America”, and said that it was based on “a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated health care landscape”. The $34-billion merger will create the biggest seller of Medicare Advantage plans, and will churn out revenues of nearly $115 billion each year. Aetna aggressively defended its stance and support of their merger with Humana, which they insist is different from the merger details between Cigna and Anthem.
The lawsuits, filed Thursday morning, challenge the mergers on the grounds that they would “lead to higher health insurance prices, reduced benefits, less innovation and worse service for over a million Americans” – thus violating United States antitrust laws.
Cigna released a statement that predicted the planned merger could be pushed to 2017 “if at all”.
The combined company would have about 25 percent of that market, according to Bloomberg, with about half its $115 billion in revenue coming from Medicare plans, Aetna has said.
A proposed merger between health insurance giants Aetna and Humana would drive up prices, according to a lawsuit blocking the plan. He said a merger of this magnitude – involving four of the five largest insurance companies in the country – threatens to increase premiums and slow innovation. The U.S. government has been said to be preparing to sue to block the $37 billion deal because it would limit options for consumers. The companies said there is “robust” competition in Medicare, as about 70 percent of Medicare beneficiaries elect to participate in coverage provided directly by the federal government.
Advertisement
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.
