Federal Judge Blocks $54 Billion Anthem/Cigna Merger Image courtesy of Anthem
Only a few weeks after a federal court blocked the insurance mega-merger of Aetna and Humana, it’s happened again: Last night, a U.S. District Court judge rejected the $54 billion marriage of health insurance giants Anthem and Cigna.
The two companies announced their intention to live in corporate merged bliss back in 2015, barely a few weeks after fellow insurers Aetna and Humana announced their plans to merge as well.
After a year of review, however, the Department of Justice and several states filed suit to block both mergers, arguing that the mergers would “fundamentally reshape the health insurance industry,” reducing health care access, competition, and options for tens of millions of Americans.
The DOJ argued that the mergers would reduce competition in three key places: for individuals buying health insurance on the exchange marketplace, for employers buying group plans for employees, and for Medicare recipients seeking supplemental care. So, basically everyone.
D.C. District Court Judge Amy Berman Jackson agreed with the DOJ, ruling yesterday [PDF] that “the proposed combination is likely to have a substantial effect on competition in what is already a highly concentrated market.”
The market in question is the national market, where companies that employ more than 5,000 employees shop for large-scale group plans. “Witness after witness agreed that there are only four national carriers offering the broad medical provider networks and account management capabilities needed to serve a typical national account,” Judge Jackson wrote. (The other two are Aetna and Humana.)
“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects,” Judge Jackson continued. “It will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market.”
Consumer advocates applauded the ruling — including our colleagues down the hall at Consumers Union, who had testified before the Senate about the merger’s potential anticompetitive effects.
“The Justice Department had laid out strong proof for the court that allowing these two health insurance giants to combine forces would seriously have harmed consumers across the country, especially those who get insurance through their workplace,” said senior policy counsel George Slover. “These workers and their families would have found themselves boxed in with fewer choices, higher costs, and inferior quality coverage.”
“We are pleased the court has agreed that this merger needed to be stopped.”
The companies, of course, are not pleased. Anthem CEO Joseph Swedish said in a statement that, “If not overturned, the consequences of the decision are far-reaching and will hurt American consumers by limiting their access to high quality affordable care, slowing the industry’s shift to value based care and improved outcomes for patients, and restricting innovation which is critical to meeting the evolving needs of healthcare consumers.”
Anthem “will continue to work aggressively to complete the transaction,” he added, indicating that Anthem and Cigna, once again like Aetna and Humana before them, are probably planning an appeal.
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