Dec 10 (Reuters) – A possible deal between U.S. health
insurers Cigna and Humana has been abandoned over
terms, sources familiar with the deal told Reuters on Sunday.
Such a deal likely would have faced scrutiny from the
U.S. Justice Department (DOJ), which in 2017 successfully
stopped Anthem, now Elevance Health, from buying Cigna
for $54 billion, and thwarted Aetna’s plan to purchase rival
Humana for $34 billion.
Here’s a look at what happened with those deals first
announced in 2015.
WHAT WAS THE RATIONALE FOR THE PROPOSED MERGERS?
Aetna, Humana, Anthem and Cigna cited the Affordable Care
Act, popularly known as Obamacare, which was passed by Congress
in 2010 to significantly expand access to affordable health
insurance. They said aspects of the new law meant their industry
needed to consolidate to cope with the costs of expanding
coverage.
WHAT DID THE JUSTICE DEPARTMENT SAY IN ITS COMPLAINTS?
In each of the two complaints filed in federal court in
Washington in 2016, the Justice Department noted the other deal
and the extraordinary consolidation that was being planned for
the industry. It asked federal judges to order each transaction
stopped.
The Justice Department argued that Anthem’s deal for Cigna
would mean “higher prices and reduced benefits” for consumers,
including big national employers who pay health insurers to
cover their workers. The government complaint also cited Cigna
as an innovator that was finding ways to lower medical costs.
“Without the merger, Cigna expects to double in size in the next
seven to eight years,” it said in its complaint.
The department’s argument against the Aetna deal to buy
Humana focused on Medicare Advantage, which is federal Medicare
coverage provided by private health insurers. The government
said the merger would end competition for Medicare Advantage
business between the two. “Competition between Humana and Aetna
has led to lower premiums, more generous benefits, better
provider networks, and improved coordination of care,” the
government said in its complaint. Aetna is now part of CVS
.
TWO JUDGES, TWO RULINGS FOR THE GOVERNMENT
In January 2017, just days into the Trump administration,
Judge John Bates of the U.S. District Court for the District of
Columbia said Aetna’s proposed deal with rival Humana was
illegal because it would “substantially lessen competition in
the sale of individual Medicare Advantage plans in 364 counties
identified in the complaint and in the sale of individual
commercial insurance on the public exchanges in three counties
in Florida.”
In February 2017, Judge Amy Berman Jackson ordered Anthem’s
deal for Cigna stopped, agreeing with the government’s
assessment that it would reduce competition in an already
concentrated health insurance market, particularly for big
national employers.
Anthem fought on, and an appeals court upheld the decision
to block the deal in April 2017. Future Supreme Court Justice
Brett Kavanaugh dissented, saying that a combined Anthem/Cigna
would require higher payments to manage the accounts but that
would be offset by better negotiated rates paid to providers.
DOES THE DOJ ALWAYS WIN?
No. The Biden administration fought a plan by UnitedHealth
, the largest U.S. health insurer, to buy Change
Healthcare for $8 billion, arguing it would give UnitedHealth
access to its competitors’ data and ultimately push up
healthcare costs.
The DOJ lost in 2022. The judge said efforts the companies
undertook to address antitrust concerns were sufficient.
(Reporting by Diane Bartz; Editing by Bill Berkrot)
