“These mergers would reshape the industry, eliminating two innovative competitors – Cigna and Humana – at a time when the industry is experimenting with new ways to lower health care costs”, the government said in its court filings. The department has scheduled an 11 a.m. ET press conference to discuss the lawsuits.
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“That competition benefits numerous people who rely on the Medicare Advantage program to help cover their healthcare costs”, the Justice Department said.
In very pointed comments about the deals, William Baer, assistant attorney general, said that these insurance companies are some of the most “sophisticated” firms in the country and “don’t need these deals to survive”.
“If permitted to proceed, Anthem’s purchase of Cigna likely would lead to higher prices and reduced benefits, and would deprive consumers and healthcare providers of the innovation and collaboration necessary to improve care outcomes”, the suit said.
“We view them as inadequate, incomplete”, she said.
The Justice Department has pushed aggressively in recent years to block deals in several industries that they say will reduce competition.
After investigating the proposed merger’s potential impact on competition, Jepsen said it’s his office’s “firm belief that, if allowed to proceed, the merger would substantially lessen competition” and hurt the availability of competitively priced health care and the quality of care in CT.
Aetna and Humana said Thursday they plan “to vigorously defend the companies’ pending merger”, worth $33 billion.
Eight states including Florida and IL, plus the District of Columbia, are joining the federal government’s suit to block the Aetna-Humana deal. The companies have said that because the marketplace has been transformed by Obamacare, profits have been limited.
Cigna said it was now evaluating its options.
Eleven states joined in the challenge to the Anthem-Cigna merger, and eight states joined in challenging the Aetna-Humana merger.
For antitrust officials at the Justice Department, it is standard practice to prepare complaints against deals even in cases that are ultimately settled with remedies like asset sales.
The government’s concerns echo a broader sentiment within the Obama administration that competition must be protected among health insurers in order to deliver quality health care to Americans.
If the government successfully scuttles the deals, Anthem would owe Cigna $1.85 billion in breakup fees. If the deals fail for other reasons, the breakup fees would be different. In addition, it has already presented two separate divestiture proposals to USA officials, said the person, who spoke to Bloomberg on condition of anonymity because the matter is private.
But Baer, the Justice Department official, said company offers to sell off some of their holdings would be piecemeal and suggested that no settlement would solve the anti-competitive nature of the mergers.
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In March 1998, Baer asked a court to stop a major consolidation of the USA drug wholesaling business.
