The Justice Department has officially filed suit against the Anthem-Cigna and Aetna Humana mergers, challenging a pair of deals that would have narrowed the five largest U.S. health insurers down to three.
In its complaint against Aetna, the DOJ says that if its deal with Humana proceeds, it would “lead to higher health insurance prices, reduced benefits, less innovation and worse service” for consumers. It makes a similar argument in its complaint against Anthem. Several state attorneys general are named as plaintiffs in both suits.
“We’ve carefully considered the impact that these acquisitions would have on the competitive of the multi-trillion dollar health insurance industry,” U.S. Attorney General Loretta Lynch said in a press conference Thursday. “If allowed to proceed, these mergers would fundamentally reshape the health insurance industry ... drastically constricting competition in a number of key markets.”
Both cases were reviewed at same time, though investigations were separate.--Attorney General Loretta Lynch.— FierceHealthPayer (@HealthPayer) July 21, 2016
For Anthem and Cigna, that’s primarily in the employer-sponsored insurance market, said DOJ antitrust official William Baer, who pointed out that the companies “are but two of a handful of options for employers looking to get insurance for their employees.” Cigna’s innovative wellness programs have pushed Anthem to compete harder to innovate, he added, and “all this competition would be lost as a result of the merger.”
In the case of Aetna and Humana, the major concern is in the Medicare Advantage space. Seniors in the MA program “benefit greatly” from competition between Aetna and Humana, and as a result of the merger would see their choices limited, benefits reduced and premiums go up, Baer said.
He also decried the proposed divestitures that Aetna had floated to ease concerns about competition, saying “we view them as inadequate and incomplete.” Selling off MA assets to small plans is insufficient in this case, as those plans lack the critical branding and star quality ratings of the larger carriers.
“The standard we apply is, 'will the status quo be observed?'” Baer said. “We have zero confidence that the proposals that have been made come close to meeting that standard.”
And both deals, he added, would reduce competition in the Affordable Care Act-created public exchanges, a market in which the merging companies have been among the most active, according to Baer. Many previously uninsured and underinsured individuals who are served by that market are especially at risk for increases in premiums, he said.
The news comes as little surprise, as in recent meetings with the leaders of Aetna and Humana, as well as Anthem and Cigna, antitrust officials have expressed doubts that the companies could offer adequate remedies to concerns about the mergers' effect on competition. As demonstrated in other scuttled deals, the DOJ has been increasingly skeptical of the merits of typical antitrust remedies, including divestitures.
The American Medical Association, which has been a vocal opponent of the deals, applauded the DOJ’s decision in a statement emailed to FierceHealthPayer. “Today’s action by the DOJ acknowledges the AMA’s concern that patients’ interests can be harmed when big insurers acquire rivals and develop strangleholds on local markets,” AMA President Andrew Gurman said. “Allowing commercial health insurers to become too big and exert control over the delivery of healthcare would be bad for patients and vitality of the nation’s healthcare system.”
For its part, Aetna appears ready to enter a legal fight for the survival of its deal with Humana.
“We will absolutely defend our deal in court should it come to that,” Aetna spokesman Matthew Clyburn said in an email to FierceHealthPayer before news official broke of the DOJ’s suit.