Justice Department Sues to Block Merger of Anthem/Cigna and Aetna/Humana

In a trend of challenges to large mergers, the Department of Justice brought suit to stop two separate mergers of the nation’s largest healthcare insurers; Anthem’s purchase of Cigna, and Aetna’s acquisition of Humana.  The DOJ cited concerns that the mergers would increase the cost of healthcare across the U.S. and reduce health provider options for consumers.

The DOJ had expressed concerns that the Aetna-Humana merger had the potential to negatively affect the Medicare Advantage market. Their issue with the Anthem-Cigna centers on health insurance markets provided by large employers, as well as regional markets.

Although Cigna has said they are reviewing their options, the other three carriers vowed to fight the blockage, while at the same time being open to negotiation with the DOJ. Divestitures may be an option, and new rounds of potential deals could emerge if the carriers agree to end the fight at this time.

If the mergers fail, Cigna would receive a $1.86 billion contract pay-out from Anthem, while Aetna would have to fork over $1 billion to Humana.

The Obama administration has argued that the mergers would reduce the healthcare options that were advertised during the formation and roll-out of the Affordable Care Act. The shares of all four insurers increased after the suits were filed last week.