We closed out 2015 with the health insurance market poised to get a lot smaller, as Anthem proposed to by Cigna and Aetna said it would buy Humana. If both mergers go through, the number of large nationwide health insurance carriers would drop to just three… a big challenge in a U.S. that’s seen the market for health insurance expand since the Affordable Care Act went into effect. And if reports are true, the Justice Department may feel that’s just too much contraction.
Bloomberg reports that the ever-popular “sources familiar with the matter” are saying that the Antitrust Division is planning to file suits to block both deals, possibly as soon as this week.
If both mergers went through, the national market would consist of Anthem, Aetna, and United Health. That, it seems, is not enough competition for anyone, at least as far as the Antitrust Division is concerned.
The sources tell Bloomberg that officials at Justice have strong concerns that shrinking the insurance market so far would harm consumers, and that even spin-off concessions — which large companies are always prepared to offer with big mergers — are unlikely to allay those worries.
Another source told Bloomberg that the final decision will likely be made at the DoJ this week and that the suits could be ready this week or next.
When the Antitrust Division sues over a merger, the companies involved can agree to settle the suit (generally, by canceling the merger plan) before any legal suit is actually filed. That may or may not happen here. However, as Bloomberg points out, the merger deals signed in both instances require the parties to try to go to court to fight government lawsuits that seek to hamper the transactions.
Both proposed mergers have faced scrutiny from consumer advocacy groups, as well as from a number of states’ attorney generals and advisory boards.
Bloomberg asked spokespeople for all four companies — Anthem, Cigna, Aetna, and Humana — for comment, but none had anything to say.
U.S. Said Readying Suits Against Anthem, Aetna Insurer Deals [Bloomberg]
by Kate Cox via Consumerist
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