Federal judge rejects Anthem-Cigna merger
Washington – The U.S. Justice Department won a second big health insurer antitrust case late Wednesday when a federal judge blocked a proposed merger between Anthem and Cigna.
“Today’s decision is a victory for American consumers,” said Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “This merger would have stifled competition, harming consumers by increasing health insurance prices and slowing innovation aimed at lowering the costs of healthcare.”
U.S. District Judge Amy Berman Jackson decided the merger of the insurance giants would result in a drop in competition in dozens of insurance markets across the nation. Unless it is successfully appealed, her decision means Anthem will owe Cigna a $1.85 billion breakup fee under the terms of their merger agreement.
Neither Anthem nor Cigna had an immediate response to the ruling.
Last month, U.S. District Court Judge John Bates rejected a proposed merger by Aetna and Humana, saying it would stifle competition in the Medicare Advantage market.
The judge that presided over the Anthem-Cigna case did not make public her opinion, saying it made reference to information discussed in open court that was subsequently put under seal by one of the parties involved in the lawsuit.
Berman Jackson gave the parties involved until the close of business Thursday to indicate ”whether it has any objection to the Court unsealing the Memorandum Opinion docketed on this date in its entirety and if so, specifying what portions it believes should remain under seal and why.”
The Justice Department argued that a merger of the insurers would shrink competition for the policies purchased by large businesses to cover their employees.
The insurers argued the merger would result in “efficiencies” that would drive down medical and premium costs.
They argued smaller, regional insurers, like Harvard Pilgrim, would provide enough competition to hold down prices and spur innovation.
Nationally, Anthem covers 40 million Americans, and Cigna covers 13 million. The merger would have produced the nation’s largest health insurer, eclipsing the current reach of United Healthcare.
Anthem has the most health insurance customers in Connecticut, followed by Aetna and Cigna.
Connecticut Attorney General George Jepsen determined the merger would limit competition in the state’s health insurance market, and Connecticut joined the federal lawsuit along with the District of Columbia, California, Colorado, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee and Virginia.
During the trial, Justice Department attorneys also argued that animosity between the top executives of Anthem and Cigna doomed the merger to failure.
Court documents indicate Cigna stopped cooperating with Anthem on the merger after the DOJ filed its lawsuit in July to block it.
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