DOJ plans to file lawsuits to block Anthem/Cigna, Aetna/Humana mergers

The Justice Department says the loss of Medicare competition would be “particularly acute” in 364 counties across the country, including 52 in Iowa. Access to health insurance saves lives, improves health and reduces the cost of care for all Americans.

According to many analysts, the new barriers on health insurance company mergers in the U.S. have belied expectations of a smooth ride for the deals.

Joining the U.S.in the Cigna/Anthem suit are nine states and the District of Columbia, including California and CT who both had storied histories with the pending merger.

Aetna and Humana poses less of a concern because that business is about Medicare Advantage, which involves local markets and divestiture could help calm antitrust concerns, while there really is no remedy to anti-competitive concerns for the Anthem and Cigna merger, he said.

Assistant Attorney General William Baer said the two mergers would leave consumers at risk by reducing benefits and raising premiums.

America’s Health Insurance Plans, which represents the health-insurance industry, has said that the insurer combinations were necessary to counter the growing power of hospitals, which themselves have grown larger through mergers. About a year ago, Anthem (ANTM – Analyst Report) agreed to purchase Cigna (CI – Analyst Report) for $48 billion, and Humana (HUM – Analyst Report) agreed to be bought out by Aetna (AET – Analyst Report) for $37 billion.

Federal regulators filed a lawsuit today to block Aetna from acquiring Humana because they allege the merger would reduce competition, harm Americans across the country and lower the quality of care.

Both Anthem and Aetna said they plan to fight the DOJ lawsuits. Gen. William Baer told Congress that the deals would be scrutinized “very, very carefully” because they would be a “game changer” for the industry.

The proposed $54 billion merger of Indianapolis-based Anthem Inc.

The big insurers argue that by getting larger they will be able to negotiate better prices with pharmaceutical companies, hospitals and doctor groups that also are growing.

The Obama administration is expected to announce Thursday that it will seek to block two mega health care mergers, according to a government official who has been briefed on the matter. It is the nation’s second-largest health insurer.

In a statement Thursday, Cigna said it was evaluating its options and did not expect the deal to close soon, “if at all”. Though rumors have been circling that Aetna has been planning to sell Medicare Advantage assets to ease antitrust concerns, the Humana/Aetna merger could dominate the MA market with 4.5 million policyholders.