AllHealth.news | Health Insurance News — A potential $54 billion deal that would have merged two major health care insurance companies, Anthem and Cigna, which would have represented the largest health insurance transaction in the U.S to date, has been blocked by a federal judge in Washington DC. More on Anthem and Cigna merger below.
According to reports gathered from Health Informatics, the Feb. 8 court ruling came from Judge Amy Berman Jackson of the U.S. District Court for the Washington DC who issued the ruling against Anthem’s takeover of Cigna.
The decision came just few weeks after another U.S. District Judge John D. Bates in the state of Washington blocked the $37 billion Aetna-Humana merger.
According to a Reuters report; “Government antitrust officials argued that both deals would lead to less competition and higher prices for Americans. The acquisitions would have reduced the number of large national U.S. insurers from five to three. Cigna is entitled to receive from Anthem a $1.85 billion break-up fee if the deal fails to win regulatory approval.”
When the Aetna-Humana merger deal was blocked last month (December 2016), insiders expressed serious doubts at that time about the potential for the Anthem-Cigna merger to be cleared, which was considered the tougher of the two deals to pass.
If the two mergers did clear, it would have signaled an extraordinary effort to consolidate the U.S. health insurance industry. In both cases, appeals are possible but would likely be unsuccessful, according to reports.
In July (2016), the U.S. Department of Justice (DOJ) announced that the department, along with attorneys general from multiple states, would file lawsuits to block Anthem’s proposed acquisition of Cigna and Aetna’s pending acquisition of Humana. The DOJ alleged at the time that the transactions would “increase concentration and harm competition across the country, reducing from five to three the number of large, national health insurers in the nation.”
According to a Politico report on February 8, “Anthem had argued that the merger would create $3 billion in savings that would largely be passed on to customers through lower rates. The company also pointed to emerging competitors, including private insurance exchanges, as evidence that there would continue to be vigorous competition for national accounts.”
However, those arguments eventually lost with Wednesday’s ruling over the Anthem and Cigna merger, as Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia issued the ruling against Anthem’s takeover of Cigna.
- Story credit: Health Informatics
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