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Rheumatology Practice Management August 2016 Vol 4 No 4 - Payment Reform
Jessica Miller

The Department of Justice filed an antitrust lawsuit to block 2 proposed health insurance plan mergers: Anthem’s acquisition of Cigna Corporation and Aetna’s acquisition of Humana.1 The suit alleges that the consolidations would reduce the United States’ largest national health insurers from 5 to 3, decrease competition, and raise healthcare costs.

“Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve,” said Loretta E. Lynch, Attorney General, Department of Justice, Washington, DC, in a statement released by the Department of Justice Office of Public Affairs.

“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 3 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,” she said.

According to the complaint, Aetna’s proposed merger with Humana, valued at $37 billion, would decrease Medicare Advantage competition, and impact >1.5 million customers. Aetna is the fourth largest Medicare Advantage insurer and Humana is the second; by buying Humana, Aetna would effectively eliminate one of its strongest competitors in the marketplace.

Similarly, the complaint over Anthem’s acquisition of Cigna, valued at $54 million, argues that the merger would significantly reduce head-to-head competition among commercial insurers in a number of markets, including healthcare services from hospitals, physicians, and other providers. The Department of Justice describes Cigna as “a leader in the industry’s transition to value-based care,” and argues that losing them as a “competitive force” would hurt the healthcare industry.1

“The proposed mergers would eliminate 2 innovative competitors—Cigna and Humana—at a time when competition has been pressuring insurers to develop new models of care designed to keep Americans healthier, to deliver healthcare more efficiently, and to control the costs of providing care,”1 said Sonia Pfaffenroth, Deputy Assistant Attorney General, Antitrust Division, Department of Justice, in a news release.

Anthem responded with a news release about the lawsuit, calling it “an unfortunate and misguided step backwards for access to affordable healthcare for America.”2 Anthem believes these actions are “based on a flawed analysis and misunderstanding of the dynamic, competitive, and highly regulated healthcare landscape.”2 Anthem said that they are committed to challenging the Department of Justice’s decision.

Cigna, however, responded that they were reviewing their options under the terms of the merger agreement led by Anthem, and did not believe that the merger would close in 2016.3

“In light of the DOJ's [Department of Justice] decision, we do not believe the transaction will close in 2016 and the earliest it could close is 2017, if at all,” according to the announcement by Cigna.3

In a joint statement released by Aetna and Humana, the companies said that they would “vigorously” defend the pending merger, adding that “a combined company will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers.”4




References

  1. Justice Department and State Attorneys General sue to block Anthem’s acquisition of Cigna, Aetna’s acquisition of Humana [news release]. Washington, DC; Department of Justice Office of Public Affairs; July 21, 2016. www.justice.gov/opa/pr/justice-department-and-state-attorneys-general-sue-block-anthem-s-acquisition-cigna-aetna-s. Accessed August 1, 2016.
  2. Anthem statement regarding action by the Department of Justice [news release]. Indianapolis, IN; Anthem; July 21, 2016. www.businesswire.com/news/home/20160721005853/en/Anthem-Statement-Action-Department-Justice. Accessed August 1, 2016.
  3. Cigna comments on DOJ position regarding proposed transaction with Anthem [news release]. Bloomfield, CT; Cigna Corporation; July 21, 2016. www.cigna.com/newsroom/news-releases/2016/cigna-comments-on-doj-position-regarding-proposed-transaction-with-anthem. Accessed August 1, 2016.
  4. Aetna and Humana to vigorously defend their pending transaction [news release]. Hartford, CT, and Louisville, KY; Aetna and Humana; July 21, 2016. www.businesswire.com/news/home/20160721005832/en/Aetna-Humana-Vigorously-Defend-Pending-Transaction. Accessed August 1, 2016.
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Last modified: September 15, 2016
  • American Health and Drug Benefits
  • Lynx CME
  • Value Based Care in Rheumatology
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