Judge Blocks Anthem-Cigna Merger

By Teresa Lo

February 9, 2017

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Summary: Citing antitrust issues, a federal judge has blocked the merger between two major health insurance agencies.

On Wednesday, Judge Amy Berman Jackson blocked a proposed $48 billion merger between healthcare giants, Anthem and Cigna. The company’s potential union could have significantly reshaped the industry, but according to Jackson and the Department of Justice, the deal would have harmed customers.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects,” Judge Jackson wrote. “It will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market.”

Leading up to this decision, the merger proceedings between Anthem and Cigna had not been a smooth process, according to The New York Times. Last year, court documents stated that the two had accused each other of breach of contract. Nevertheless, the health insurance giants stated that they wanted to move forward and that their combining would offer billions of savings to consumers.

However, the company’s conflicts raised concern for the Justice Department and Judge Jackson, who said that customers would not be able to benefit from their merger because of the fighting.

“Anthem urges the court to look away, and it attempts to minimize the merging parties’ differences as a ‘side issue,’ a mere ‘rift between the C.E.O.’s,” Judge Jackson wrote. “But the court cannot properly ignore the remarkable circumstances that have unfolded both before and during the trial.”

The merger between Anthem and Cigna were announced a year and a half ago, and it came as a response to changes in the market brought upon by the Affordable Care Act. The reasoning being that if Anthem and Cigna combined that they would have more clout negotiating with hospitals, which have also been merging over the years.

Judge Jackson’s ruling came two weeks after another judge dismissed a $37 billion merger between Aetna and Humana. Like with Jackson’s decision, that judge cited antitrust issues. If Anthem and Cigna had been allowed to combine as well as Atena and Humana, there would have only been five major insurers left in the game.

Former U.S. Attorney General Loretta Lynch remarked on the potential mergers last summer and said that they would harm the market.

“If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care and better benefits would be eliminated,” Lynch.