The Justice Department is also blocking a similar merger between Aetna and Humana. Cigna stock closed up by 5.42% to $140.32 and shares of Anthem ended trading higher by 2.61% to $139 on Thursday.
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Analysts who follow the industry say that when insurers grow big nationally it doesn’t necessarily mean they dominate the local markets where their products are sold because there are so many regional insurers.
The health insurers have argued that the deals would allow them to expand their reach, becoming more efficient and helping check the rising cost of health insurance.
The lawsuits are unlikely to end maneuvering in the health insurance industry, as health plans try to bolster their positions in a fast-changing industry still being reordered by the 2010 Affordable Care Act.
“With all the changes taking place in the delivery of healthcare services, New Hampshire healthcare consumers and providers have benefitted from the robust competition between Anthem and Cigna” he said.
“Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve”, Lynch said in a statement Thursday.
But then in late spring, the deal hit turbulence: There were reports of internal management squabbles between the two companies, and then an International Business Times investigative series about the merger set off a firestorm in CT, which has been leading the national multistate review of the transaction.
He said Humana and Aetna have some of the country’s most innovative Medicare Advantage plans. As of 1:05 PM EDT, HUM shares are up 7.51% at $170.31, ANTM shares have gained 2.94% to trade at $139.45, CI shares rose 3.42% to $137.65, and AET shares surged 2.84% to trade at $119.80.
Anthems statement takes a different stand. “I think that deal leads to substantial market concentration”, he said. Electrolux and Halliburton later abandoned those deals. Another analyst echoed that sentiment.
The Obama administration said Thursday it will seek legal action to block Indianapolis-based Anthem’s $48 billion acquisition of Cigna. Still, the Aetna-Humana deal could be defended as is, he said, if they are willing to make the necessary divestitures.
The lawsuits mark the latest in a series of Justice Department’s Antitrust Division to reign in private sector activities its sees as anti-competitive. Both mergers being challenged are part of a wave of consolidation sweeping the health care industry, as NPR’s Scott Hensley reported a year ago. Lynch has assured the American people that the Justice Department would protect their interests.
She added the most pressing competition issues today are the results of health-care provider mergers and the rising cost of pharmaceuticals.
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Even so, the health insurers vowed to fight the lawsuit. The company raised its expected earnings for the current fiscal year.
