The former would be required to pay $1.85 billion to Anthem, while Humana will make a $1-billion payment to Aetna.
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“And in doing so, it would substantially lessen competition, harming millions of American consumers, as well as doctors and hospitals”.
“We are asking the court today to find this merger in violation of antitrust law and to permanently enjoin it from taking place”, said Connecticut Attorney George Jepsen, “Both Anthem and Cigna have a significant presence in Connecticut’s healthcare market”.
Later in the lawsuit, the government talks about how an Anthem-Cigna deal would harm competition in 12 counties on Colorado’s health insurance exchange.
Though the health insurers proposed several divestiture plans to remedy competition concerns, Mr. Baer said those remedies included divesting “bits and pieces” of business to smaller, regional health insurers, a strategy he called “incomplete and impractical”.
Cigna released a separate statement to confirm that it is “currently evaluating its options consistent with its obligations under the agreement”. A spokesperson declined requests by FOXBusiness.com to be more specific.
In challenging the merger, Attorney General Lisa Madigan disagreed with the Illinois Department of Insurance’s view of the deal.
Waging a fight against the insurance deals also would reflect another mark left by the Obama administration on an industry already dramatically reshaped by the president’s sweeping health care overhaul.
Aetna and Humana refuted that saying, “Approximately 70 percent of Medicare beneficiaries elect to participate in traditional Medicare, administered by the government, and that option competes with MA plans administered by companies like Aetna and Humana”.
“The proposed mergers would eliminate two innovative competitors – Cigna and Humana – at a time when competition has been pressuring insurers to develop new models of care created to keep Americans healthier, to deliver healthcare more efficiently and to control the costs of providing care”, Justice antitrust official Sonia Pfaffenroth said. It does not believe the transaction would close in 2016, and the earliest it would close would be in 2017, “if at all”.
“For most Americans, health insurance is not a luxury, but a necessity”, said Attorney General Loretta Lych, announcing the antitrust lawsuits.
Lynch also noted that the mergers could shrink the so-called big five health insurers (including United Healthcare) to three.
While there likely will be more proposed health care mergers to come, policymakers can take steps to ensure that consumers and taxpayers are protected.
Aetna and Anthem shares were up in morning trading while Humana and Cigna shares fell.
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He added that the mergers are a “convenient shortcut to increase profit for these two companies”, and that the DOJ had “zero confidence” that they would benefit consumers.
