Aetna/Humana & Anthem/CIGNA Mergers Fall Through

Two separate mergers between 4 of the 5 largest health insurers have been called off. A deal between Aetna and Humana, a $34 billion dollar proposal, fell through after a federal judge ruling cited antitrust concerns. The announcement on Tuesday comes days after another federal judge rejected the proposed merger of Anthem and CIGNA for $48 billion.

Aetna, the third largest insurer in the nation, announced its bid for Humana in 2015. Aetna hoped that the deal would allow it to expand its presence in the Medicare Advantage plan market, which has been growing rapidly. U.S. District Judge Joh Bates’ decision noted that federal regulation would likely be “insufficient to prevent the merged firm from raising prices or reducing benefits.” As such, Humana (the nation’s 5th largest insurer) is entitled to a $1 billion breakup fee.

The insurers have argued that growing through acquisitions would allow them to negotiate prices with hospitals, pharmaceutical companies and doctor groups that also are merging and growing larger.

After the Anthem-Cigna deal was blocked last week, the American Medical Association said that a merger would have created a health care company too large to regulate and with too much control over the lives of consumers.

If you have any questions regarding how these changes may affect your employee benefits program, please reach out to Patrick Beale via email or call the office at 1-804-751-0600.

Leave a Reply

Your email address will not be published. Required fields are marked *

XHTML: You can use these tags <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>