Feds file suit to block Aetna-Humana, Anthem-Cigna mergers

"We will not hesitate to intervene". "We will protect the interests of the American people".

The federal government is also suing to block a similar merger, a $37 billion deal between insurance giants Aetna and Humana, also because of concerns about competition.

A report a year ago from the Kaiser Family Foundation calculated Medicare Advantage market shares for UnitedHealthcare (20 percent), Humana (19 percent) and Aetna (7 percent), and concluded the merged company would overtake UnitedHealthcare as the market's biggest player.

"The two mergers that we are challenging today involve four of the five largest health insurance companies in the country", Baer stated at the press conference. Matt Asensio, a Cigna spokesman, declined to comment, as did Bonnie Jacobs at Anthem.

The Missouri Department of Insurance in May found that in some markets the Aetna-Humana deal would reduce competition for those who rely on Medicare Advantage. "It is important that we do everything we can to preserve competition in these markets". Anthem commented that it is fully committed to challenge the lawsuit in court, but may also reach a settlement as well. Cigna said it was evaluating its options. Cigna said it believes the acquisition will close in 2017 at the soonest, "if at all". Aetna fell 2.4 percent to $115.56 and Anthem fell 2 percent to $132.25.

Shares of the four insurers were all lower in morning trades.

Humana's raised forecast "bodes well for the rest of the industry".

She said she expects Humana and Cigna to use their strong cash positions to buy back shares or make small acquisitions. "Let's look at Anthem's purchase of Cigna".

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The government suit focused particularly on their offering of Medicare Advantage, privately managed delivery of the government's Medicare health benefits programs for people over 65.

Dallas-Fort Worth wouldn't see many changes, as Blue Cross Blue Shield of Texas (a subsidiary of Chicago's Health Care Services Corporation) is the market leader here. Missouri came out firmly against it, while others, including California and NY, approved it after reaching a settlement.

"When it comes to the Anthem and Cigna merger, bigger is not better for California's consumers or the health insurance market", Jones said.

The insurance companies can now choose to go to court and fight the federal government's lawsuit, or they can decide to settle with the DOJ outside of court or terminate the deals all together.

But the trade group representing insurers - America's Health Insurance Plans, or AHIP - said consumers benefit from insurer mergers that work to keep care affordable.

The U.S. Department of Justice, 11 states and the District of Columbia filed a lawsuit Thursday seeking the stop the merger.

The proposed $54 billion merger of Indianapolis-based Anthem Inc. Humana is supposed to receive $1 billion from Aetna, according to the merger agreement. If the deals fail for other reasons, the breakup fees would be different.

Aetna has already presented two divestiture plans to the Justice Department, the source told Bloomberg.

(Copyright © 2015. All Rights Reserved.)
 
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