The Department of Justice sues Anthem and Aetna
July 22, 2016
Anthem and Aetna representatives have been meeting with members of the Department of Justice (“DOJ”) for months. The purpose of these discussions was to develop business deals that would satisfy the DOJ’s antitrust concerns. The announcement that the DOJ plans to sue both firms indicates that the configuration of the current business deals has not accomplished the goal of reducing antitrust concerns.
Anthem is in the process of a $48 billion merger with Cigna. Aetna is working towards a $37 billion merger with Humana. If these mergers go forward, the current 5 largest insurance companies would be reduced to the 3 largest insurance companies. The DOJ believes these mergers will raise prices and reduce access to care for consumers.
Three of the 4 companies are in the process of fighting the DOJ lawsuit. Cigna said that it is reviewing its options before it decides if it should enter a challenge to the DOJ.
The current administration has consistently focused on the need for competition in the insurance industry. We have observed that premiums are lower for consumers in the state exchanges where there is insurance competition.