US To Go To Court To Block Aetna, Anthem Deals

The Department of Justice is suing four major health insurance companies in an attempt to block two proposed mergers.

The Department of Justice said Thursday the combinations of Aetna and Humana and Anthem and Cigna would hurt competition that restrains the price of coverage and reduce benefits, among other drawbacks. It would combine two of the few remaining commercial health-insurance options for businesses and individuals in markets throughout the country. And the suits said the Aetna-Humana merger would leave numerous nation's seniors with only one option for Medicare Advantage, the market-based alternative to conventional Medicare.

Had the department allowed the deals, the top five national health insurers would have consolidated into three giant companies, each with revenue of more than $100 billion a year.

No deal could be the best deal for healthcare juggernauts Aetna, Humana, Cigna and Anthem, at least from an investment standpoint. The company says it will challenge the decision in court. "While these mega-mergers once seemed inevitable, when the facts surfaced, it became very clear to the Department of Justice just how harmful these deals will be to everyday people".

The Obama administration has been tough on major mergers in various industries, with the Justice Department blocking Comcast Corp.'s purchase of Time Warner Cable Inc. and Halliburton Co.'s acquisition of oil-services rival Baker Hughes Inc., among other deals.

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But in recent years, the department has shown an increasing willingness to go to court and block deals it believes could stifle competition, and antitrust officials have for months signaled their skepticism about the insurer tie-ups.

The government said the two companies compete head to head in about 90 percent of the United States districts where Aetna offers the insurance. "The competition among insurers that pushed them to provide lower premiums and higher quality care would be eliminated", she said.

"That competition benefits numerous people who rely on the Medicare Advantage program to help cover their healthcare costs", the Justice Department said.

"They do not need these deals to survive, and consumers are entitled to benefit from their continued competition", he said. Burwell declined to comment on the proposed mergers, but said: "When there is competition, that creates downward price pressure, and it also creates upward quality pressure". Individuals choose among competing insurers when purchasing policies on the public exchanges. And competition is critical for doctors and hospitals who obtain access to most of their commercial health-insurance patients by contracting with insurers to be "in-network" providers. The mergers would consolidate the industry from five big insurers to three. But the TMA argues that San Antonio, Houston, Austin, El Paso, Corpus Christi, and more than a dozen smaller markets would see the new Aetna-Humana conglomeration have too much control. Cigna is unique in its efforts to innovate, particularly in its efforts to collaborate with doctors and hospitals on wellness programs.

(Copyright © 2015. All Rights Reserved.)
 
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