Aetna’s takeover of Humana, announced on July 2, 2015, would join the country’s third and fifth-largest health insurance companies, combining 37 million customers, with combined revenues previous year of $114 billion.
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The attorney general’s office said Thursday the proposed merger would reduce, in about one-third of the state’s counties, competition among health plans that are privately run versions of the government’s Medicare program for the elderly. Eight states – Delaware, Florida, Georgia, Iowa, Illinois, Ohio, Pennsylvania and Virginia – oppose Aetna’s acquisition of Humana.
Anthem is the United States’ second-largest health insurer, followed directly by Aetna, Cigna and Humana.
Regulators said in court documents that the deals would reshape the health insurance industry and eliminate two competitors “at a time when the industry is experimenting with new ways to lower (health care) costs”. The American economy relies on competitiveness in business to keep prices at a reasonable level, and the proposed mergers will not allow that to happen.
After the Department of Justice filed antitrust lawsuits today to block two major mergers involving four health benefit giants, all of the companies’ stocks spiked, CNBC’s David Faber reported on “Closing Bell” Thursday.
Aetna and Humana said they plan “to vigorously defend the companies’ pending merger”, which is worth $33 billion.
Advocacy groups hailed DOJ’s action as a crucial step toward protecting consumers in an increasingly consolidated health care market, while Anthem and Cigna issued varied responses.
If the insurers back out of the merger deal, S&P said it could remove the ratings of both companies from its negative watch list.
The move comes as heath care and health insurance costs continue to rise significantly faster than overall inflation, and despite the efforts of the administration of President Barack Obama to press down prices and boost competition through the ambitious reforms of the Affordable Care Act, or “Obamacare”.
He said Humana and Aetna have some of the country’s most innovative Medicare Advantage plans.
“Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve”, Lynch said in a statement Thursday.
“These four companies have been among the most active in offering insurance through the exchanges”, Baer said.
Industry experts say the impact on consumers would years to materialize and could offer savings in some areas, along with the risk of higher costs elsewhere.
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If Anthem and Cigna can overcome the government’s challenge, their combination would create the biggest US health insurer by membership, topping UnitedHealth Group Inc., with total revenue of about $115 billion.
