Justice Department and State Attorneys General Sue to Block Anthem's Acquisition of Cigna, Aetna's Acquisition of Humana
Image: Pixabay

Justice Department and State Attorneys General Sue to Block Anthem's Acquisition of Cigna, Aetna's Acquisition of Humana

The mergers would reduce the number of large, national health insurers in the U.S. from five to three

July 22, 2016

The United States Department of Justice (USDOJ) is seeking to block the consolidation of four major U.S. health insurance providers into two.

The USDOJ and attorneys general from multiple states and the District of Columbia have sued to block Anthem's proposed acquisition of Cigna and Aetna's proposed acquisition of Humana, alleging that the transactions would increase concentration and harm competition across the country, reducing the number of large, national health insurers in the U.S. from five to three.

The USDOJ and state attorneys general filed challenges to the mergers in the U.S. District Court for the District of Columbia. The complaints allege that the two mergers, valued at $54 billion and $37 billion, would harm seniors, working families, individuals, employers, doctors, and other healthcare providers by limiting price competition, reducing benefits, decreasing incentives to provide innovative wellness programs, and lowering the quality of care.

"Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve," said Attorney General Loretta E. Lynch. "These mergers would restrict competition for health insurance products sold in markets across the country and would give tremendous power over the nation's health insurance industry to just three large companies. Our actions seek to preserve competition that keeps premiums down and drives insurers to collaborate with doctors and hospitals to provide better healthcare for all Americans."

"We all, including seniors, everyday workers and the previously uninsured and underinsured deserve affordable health insurance options," said Principal Deputy Associate Attorney General Bill Baer. "Competition today drives these four successful firms to fight to give us affordable options. There is no reason to put that dynamic at risk and that is why we are asking the court to stop these mergers and keep competition working for the benefit of the American consumer."

Eleven states, including California, Colorado, Connecticut, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee and Virginia, along with the District of Columbia joined the USDOJ's challenge of Anthem's $54 billion acquisition of Cigna. Eight states, Delaware, Florida, Georgia, Iowa, Illinois, Ohio, Pennsylvania and Virginia, and the District of Columbia joined the Department's challenge of Aetna's $37 billion acquisition of Humana.

The lawsuit against Anthem and Cigna alleges that their merger would substantially reduce competition for millions of consumers who receive commercial health insurance coverage from national employers throughout the United States, from large-group employers in at least 35 metropolitan areas, including New York, Los Angeles, San Francisco, Denver and Indianapolis; and from public exchanges created by the Affordable Care Act in St. Louis and Denver.

The complaint also alleges that the elimination of Cigna threatens competition among commercial insurers for the purchase of healthcare services from hospitals, physicians and other healthcare providers. The suit claims that the merger would eliminate substantial head-to-head competition in all of these markets, and would remove the independent competitive force of Cigna.

The lawsuit against Aetna and Humana alleges that their merger would substantially reduce Medicare Advantage competition in more than 350 counties in 21 states, affecting more than 1.5 million Medicare Advantage customers in those counties. According to the suit, before seeking to acquire Humana, Aetna had pursued aggressive expansion in Medicare Advantage. Aetna, the nation's fourth-largest Medicare Advantage insurer by membership, has nearly doubled its Medicare Advantage footprint over the past four years. Humana is the nation's second-largest Medicare Advantage insurer by membership.

The lawsuit also alleges that Aetna's purchase of Humana would substantially reduce competition to sell commercial health insurance to individuals and families on the public exchanges in 17 counties in Florida, Georgia and Missouri, affecting more than 700,000 people in those counties. The lawsuit alleges that by buying Humana, Aetna would eliminate one of its strongest and most capable competitors in these markets.