The Obama administration is suing to block two big health insurance mergers that would consolidate the country’s insurers down to a few big companies.
Attorney General Loretta Lynch and other Justice Department officials said Thursday morning that allowing the mergers to go forward would hurt consumers by dramatically reducing competition in the insurance markets.
“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry,” Lynch said. “They would leave much of the multi-trillion dollar health insurance industry in the hands of three mammoth insurance companies and restrict competition in key markets. Tens of millions of Americans rely on them to receive healthcare.”
Anthem has been pursuing a $48 billion takeover of Cigna, and Aetna is seeking to acquire Humana for $37 billion.
Anthem called the lawsuit “an unfortunate and misguided step backwards for access to affordable healthcare for America.” The company said it’s committed to defending itself in court but is open to a settlement with the Justice Department that would allow the deal to continue.
“Anthem is fully committed to challenging the DOJ’s decision in court but will remain receptive to any efforts to reach a settlement with the DOJ that will allow us to complete the transaction and deliver its benefits at a critical time when American consumers are seeking high quality healthcare services with greater value at less cost,” the company said.
California, New York, Connecticut and six other states and D.C. are joining the Obama administration against the proposed Anthem-Cigna merger.
If both deals were allowed to go through, it would reduce the country’s major health insurers from five to three, prompting widespread concerns about the effect on competition in health insurance markets where prices are already viewed as too high.
“We have no doubt these mergers will reduce competition,” said Associate Attorney General Bill Baer.
Health providers cheered the news, saying they want more insurers to negotiate with for lower prices, savings which can be passed down to patients. The American Hospital Association called the lawsuit “good news for consumers.”
“Hospitals want to be able to partner with others, including insurers, to transform care by making it more responsive to the needs of consumers,” said AHA President Rick Pollack, in a statement. “All of the available evidence shows that as insurers get even larger, their willingness to innovate declines. That would be a setback patients simply can’t endure.”
