- REUTERS/Suhaib Salem
The Department of Justice has officially brought lawsuits to stop the mergers of four health insurance giants.
The department filed suits to block the merger of Anthem and Cigna as well as Aetna and Humana. The combined value of the deals was roughly $91 billion.
The suits, filed in US District Court in Washington, DC, said that the mergers would not be in the best interest of consumers and would be anticompetitive, Attorney General Loretta Lynch said in a press conference announcing the moves.
“They would leave much of the multitrillion health insurance industry in the hands of just three mammoth companies, restricting competition in key markets,” said Lynch.
Lynch also noted that the mergers could shrink the so-called big five health insurers (including United Healthcare) to three.
“If the big five were to become the big three, not only would the bank accounts of the American people suffer, but the American people themselves,” Lynch said.
Bill Baer, assistant attorney general for the antitrust division, also outlined why the Justice Department rejected each merger, saying that both deals would likely force elderly people and those trying to get insurance through state exchanges to pay higher premiums.
The mergers “may be a shortcut to higher profits for these companies, but mergers are not lawful when they risk denying consumers the ongoing benefits of competition,” Baer said.
All four firms have been steadfast that the mergers would be good for consumers and not hurt competitiveness in the industry.
A statement from Cigna provided to Business Insider indicates that firm is reviewing its options and it appears that the DOJ’s ruling may cause the firm to back out of the merger. From the statement:
“Today, the Department of Justice announced that it will challenge our proposed merger with Anthem. Given the nature of the concerns raised by the DOJ and the overall status of the regulatory process, which under the terms of the merger agreement was led by Anthem, Cigna is currently evaluating its options consistent with its obligations under the agreement.”
“In light of the DOJ’s decision, we do not believe the transaction will close in 2016 and the earliest it could close is 2017, if at all.”
A spokesperson for Anthem was not immediately available for comment.
In a press release following the news, Aetna and Humana reiterated their commitment to the merger, saying they would “vigorously defend” it.
“A combined company will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers,” the release said. “Aetna and Humana look forward to making this clear in court, where a judge will review the transaction based on its merits.”
Following the news, the stocks of all four companies shot up. As of 11:15 a.m. ET, Anthem was up around 3.2%, Cigna was up 1.6%, Humana was up 4.3%, and Aetna was up 2.8%.