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.
That's what hospital and insurance companies say, anyway. But here's what the data say: Hospital and insurance mergers almost always lead to higher costs, lower efficiencies and less innovation. The reason is simple: Mergers reduce competition -- and it's competition that drives down prices and encourages more efficiency and innovation. Some healthcare mergers have been outright disasters for consumers; studies of mergers that took place in the 1990s and early 2000s showed price increases of as much as 40% in communities that lost competition. These findings are important because we are deep into a new era of healthcare consolidation.
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.
FILE - In this Nov. 17, 2009 file photo, a pedestrian walks past the headquarters of the health insurer Cigna Corp. in in Philadelphia. A federal judge on Wednesday, Feb. 8, 2017, rejected Anthem Inc.'s bid to buy rival health insurer Cigna Corp., saying the merger would likely lead to higher costs, less competition and diminished innovation. U.S. District Judge Amy Berman Jackson said the merger would significantly reduce competition in the already concentrated insurance market, particularly for large national employers.
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.