The federal government is also suing to block a similar merger, a $37 billion deal between insurance giants Aetna and Humana, also because of concerns about competition.
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The US Department of Justice has laid down the law to health insurance providers, with antitrust lawsuits being brought against two proposed mergers due to a possible lack of competition in the market.
In challenging the merger, Attorney General Lisa Madigan disagreed with the Illinois Department of Insurance’s view of the deal. 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.
If Aetna ultimately is allowed to buy Humana, it would become the biggest provider of Medicare Advantage plans. Under her leadership as attorney general, the state has joined or filed several lawsuits contesting the Obama administration’s immigration policy and Environmental Protection Agency rules. (NYSE:HUM) issued a joint statement, wherein they stated that they will “vigorously defend” their deals.
What do you think of the federal government’s attempt to block the two separate health insurance company mergers?
As for the Aetna-Humana amalgamation, the lawsuit mentioned that it will lead to higher insurance prices, reduced innovation, lowered benefits, and bad service for over a million locals. Medicare pays about 22% while Medicaid accounts for about 17%. According to the Kaiser Family Foundation, if Aetna acquired Humana with no divestitures in 2016, the combined firm would cover 25 percent of Medicare Advantage customers. But only 19 percent of Medicare beneficiaries in IL are enrolled in private plans, below the national average of 31 percent.
“Today, the industry is dominated by five large insurers commonly referred to as ‘the big five, ‘” the DOJ said in the suit against the Anthem-Cigna deal. Madigan did not join that suit.
In the suit against Anthem-Cigna, the antitrust regulators said the $45-billion combination would substantially lessen competition in an already consolidated industry, harming millions of Americans, doctors, and hospitals. “Our actions seek to preserve competition that keeps premiums down and drives insurers to collaborate with doctors and hospitals to provide better health care for all Americans”. “They’ve proven popular with lots of employers and their employees, so Anthem has had to respond, it’s had to compete harder by keeping its prices down and by adopting its own innovative strategies to prevent Cigna from winning away a lot of Anthem business”.
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The related suits filed Thursday by the DOJ and several state attorneys general come roughly a year after both pairs of companies announced their plans to merge, which would consolidate the “big five” USA insurers into three. “And consumers are entitled to benefit from their continued competition”, Mr. Baer said.
