Predicting diminished competition and likely higher costs, a federal judge has rejected Anthem Inc.'s bid to buy rival health insurer Cigna Corp. U.S. District Judge Amy Berman Jackson said Wednesday that the merger would significantly reduce competition in the already concentrated insurance market, particularly for large national employers. Cigna and Anthem are two of just four insurers selling to companies with 5,000 employees spread across multiple states, and they compete aggressively for business, the judge wrote. Berman Jackson was unconvinced by Anthem's argument that the merged company could save money for customers by combining the two insurers' different approaches to cost saving. Anthem has negotiated lower payments to doctors and hospitals, while Cigna has focused on preventive care in the hopes of reducing future expenses.
Wall Street expressed growing doubts about a pending 54 billion merger of U.S. health insurers Anthem Inc and Cigna Corp on Monday as news of management squabbles added to concerns over its review by antitrust regulators. Cigna shares closed down 4 percent at 126.15, well below Anthem's original 188 per share offer of cash and stock announced last July. Anthem shares fell 1.8 percent to 133.18. "The market is telling you that it feels the probability of the deal is significantly less than 100 percent," Morningstar analyst Vishnu Lekraj said in a telephone interview. He declined to provide his own probability forecast.
The Obama administration went to court Thursday to block two major health insurance mergers, siding with consumer advocates and medical groups worried that the consolidation of large national health plans could lead to higher premiums. The long-anticipated move by the Justice Department and attorneys general in 10 other states, including California, will at least temporarily prevent Anthem Inc.'s purchase of Cigna Corp., a combination that would have created the nation's largest health insurer. And it will stop Aetna Inc.'s bid to acquire Humana Inc., a merger that would have combined the nation's third and fifth biggest health plans. "Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve," Atty. Gen. Loretta E. Lynch said Thursday after the suits were filed in federal district court in Washington.
A federal judge on Wednesday ruled against Anthem Inc. in its quest to buy rival health insurer Cigna Corp., saying the merger could potentially lead to an increase in costs and less competition. U.S. District Judge Amy Berman Jackson issued the ruling against Anthem. Jackson said the merger would significantly reduce competition in the insurance market, particularly for large employers. Just four insurers sell to companies with at least 5,000 employees spread across multiple states, and the judge says Cigna and Anthem aggressively compete for their business. Reuters reported the Anthem, Cigna merger was a projected $54 billion deal.
WASHINGTON – The U.S. government is suing to stop two major health insurance mergers, a move regulators say is needed to protect Americans from potential cost hikes and lower quality care. The Department of Justice said Thursday that 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. Aetna Inc. proposed last summer to buy Humana Inc. for 34 billion, while Anthem Inc. moved to acquire Cigna Corp. for 48 billion. The companies said Thursday they plan to fight the federal suit. Anthem, the Blue Cross-Blue Shield insurer, called it "an unfortunate and misguided" step backward for access to affordable care.