healthcare defending mergersAnthem has proposed a merger with CIGNA while Aetna plans a merger with Humana but regulators are fighting them over it. Lawsuits have been filed to stop the mergers on the grounds that the proposed mergers would be going backwards and have a negative effect on the competition in the Medicare Advantage programs. The Department of Justice and the attorney generals of a number of states view the mergers as harmful to the push for a better quality of health care, lower premiums and better benefits.

Should the mergers go through, what was once considered the “big five” in health care insurers would be reduced to three. Though the DOJ and others filing the lawsuits see the mergers as reducing needed competition, both Aetna and Anthem officials say that competition would be maintained through divestitures. They hope to make it very apparent that this will be the case when a judge has reviewed the merger proposal according to its merits.

The DOJ feels certain that their case is strong enough to stop the planned mergers from happening. David Balto, an antitrust lawyer, had an interview with the FierceHealthPayer in which he said the DOJ has a strong case against allowing the mergers to go forward. An analyst with Leerink Partners, Ana Gupte, believes this as well and further commented that it is unlikely that the companies could win or reach a settlement that permitted the mergers.

According to William Baer of the DOJ, the suggested disvestitures would fall too far short of what is necessary to allow sufficient competition. The competition currently provided now with Cigna and Humana as independent insurers is more intense. As this is viewed to be the situation, the DOJ does not view these divestitures as adequate.

Aetna will fight to move ahead with their planned merger with Humana. Anthem also is determined to fight though Cigna has lost enthusiasm for the merger. They are going over their possible options in relation to what they are obligated to under the merger agreement.

As it stands now, if any merger takes place, it won’t be until 2017 at the earliest rather than the originally planned closing in 2016. Since Cigna is not as strongly in favor of merging with Anthem, it is likely that they are not willing to participate in a court battle. Aetna and Humana may be more willing to fight the merger blockage but it will be quite a tough battle.

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