We suspected the deal might not happen between Anthem and Cigna, but this was confirmed last Wednesday when U.S. District Judge Amy Berman Jackson blocked the deal and ruled against the proposed $54 billion merger. Berman Jackson said the merger would significantly reduce competition in the already concentrated insurance market, particularly for large national employers and noted that there are just four insurers currently selling to multi-state employers with more than 5,000 employees – Anthem and Cigna are two of the four companies.
“Eliminating this competition from the marketplace would diminish the opportunity for the firms’ ideas to be tested and refined, when this is just the sort of innovation the antitrust rules are supposed to foster,” she wrote. Anthem officials are reviewing the decision, spokeswoman Jill Belcher said. She declined to comment.
Last month, another federal judge rejected Aetna’s roughly $34 billion bid to buy rival Humana, citing in part concerns about competition in hundreds of Medicare advantage markets.
All of the insurers have argued that by getting bigger they will be able to negotiate better prices with pharmaceutical companies, hospitals and doctor groups that also are growing. They also expect to cut expenses and add more customers, which helps them spread out the cost of investing in technology to manage and improve care. Other experts in the industry believe any suggested positive impacts are so far off in terms of timing that unforeseen changes would likely eat into the savings, resulting in higher costs for consumers in the long run.
The American Medical Association expressed their support of the ruling, stating, “In a David vs. Goliath battle between consumers and mega insurers, a federal judge today ruled that Anthem’s proposed acquisition of Cigna poses a clear and present threat to the quality, accessibility and affordability of health care in the United States,” Dr. Andrew Gurman, the AMA president, said in a statement.
Time will tell and according to Anthem, they will more than likely file a repeal. From what we have seen recently, mergers in this industry and others that limit consumers’ options are destined to be off limits.