The United States Department of Justice (DOJ) recently filed a lawsuit to block the proposed mergers of Aetna-Humana and Anthem-Cigna. DOJ has cited reduced competition in many of the markets and the potential harm that the mergers can cause to American consumers as the reason for the lawsuit. The merger was announced around a year ago, and if approved, the merger will turn five biggest heath insurers in the US to three.
The injunction from DOJ is the first official action by the Federal government to stop these mergers. Many of the states had expressed concerns about the mergers based on competition earlier, though some of the states approved of the mergers. Recent statistics show that the Aetna-Humana merger was right on the cards, but the Anthem-Cigna merger experienced much difficulties in obtaining the support from state insurance regulators. When the lawsuit was filed, Aetna secured 18 out of the 20 state approvals, whereas Anthem was able to secure only 10 out of the 24 state approvals.
Before the filing of the lawsuit by DOJ, Aetna offered two plans to DOJ to alleviate anti-competition concerns, and released statements to show that they believed that the transactions would be finished by the second half of 2016. However, the lawsuit by DOJ aims to reduce competition in Medicare Advantage market, as officials believe that the Aetna-Humana merger would affect competitions in 21 states.
Considering the proposals by Aetna, Assistant Attorney General Bill Baer said that they have “zero confidence” that the proposals will come near to meeting the DOJ’s standard of maintaining same level of competition before the merger. Aetna and Humana replied in a joint statement that they are “fully committed to challenging the DOJ’s decision in court.” They also remained firm in their opinion that the merger is the best option for consumers.
The Anthem-Cigna merger has also experienced criticism and push back from DOJ before the filing of lawsuit. DOJ said that if the merger were approved, it would hurt competition in ACA’s Health Insurance Exchanges. Both the American Hospital Association and the American Medical Association have supported the lawsuit against the mergers.
Attorney General Loretta Lynch commented on the lawsuit, highlighting that if the mergers happened, “the competition among these insurers that has pushed them to provide lower premiums, higher quality care and better benefits would be eliminated.” It is likely that the DOJ’s lawsuit will take some time for legal action.