Democratic senators urge DOJ to block major health insurer mergers

Democratic senators urge DOJ to block major health insurer mergers

Democratic senators urge DOJ to block major health insurer mergers A group of Democratic senators are urging the US Justice Department to block a pair of mergers among four of the country’s largest health insurance companies.

In a letter, the senators wrote that Aetna Inc.’s $33 billion takeover of Humana and Anthem Inc.’s $48 billion plan to buy Cigna would mean higher premiums and lower-quality healthcare for consumers. Both transactions are being reviewed by the DOJ and, if approved, would bring the number of national health insurance carriers from five to three.

“We urge the DOJ to challenge these mergers from proceeding and to prevent the damage they would cause to competition and consumers,” wrote Senators Elizabeth Warren, Richard Blumenthal, Edward Markey, Al Franken, Sherrod Brown, Dianne and Feinstein and Mazie Hirono.

The lawmakers continued, saying they were skeptical of the insurers’ claims that the acquisitions would be good for consumers, as the companies could use their greater influence to achieve better patient deals with healthcare providers.

“The evidence overwhelmingly suggests that few if any cost savings secured by the merging firms through the exercise of market power will be passed on to consumers,” the senators wrote.
They also disputed insurer claims that selling certain assets to competitors would resolve antitrust concerns, pointing to previous instances where mergers coupled with divestitures actually led to higher premiums for consumers.

“We are not convinced that any divestiture required of the merging parties will succeed today, given that they have so clearly failed in the recent past,” the letter concluded.

The move comes at a time when increased opposition has plagued the proposed mergers.
Official investigations into the transactions between Aetna and Humana, Anthem and Cigna have been launched by individual state attorneys general, the US Justice Department and the Federal Trade Commission. A new coalition of consumer groups and medical associations has also spoken out against the consolidations, which would shrink the US health insurance market from five major players to just three.

In total, insurance commissioners from 20 states are considering the Aetna-Humana merger, and 27 states are looking into Anthem’s proposed acquisition of Cigna.

After the long string of approvals, Missouri Insurance Commissioner John Huff became the first regulator to issue a preliminary order barring Aetna and Humana from offering certain plans if they complete the deal first announced last year.

California Insurance Commissioner Dave Jones also made headlines this month, calling Anthem’s proposed acquisition of Cigna “anti-competitive” on the basis that it would hurt consumers, businesses and the state’s health insurance market.

The Justice Department has not yet given a timeline for decisions on either merger, but said deadlines could be negotiated and even extended under agreements between the Department and the insurers.

Both mergers were announced last July, and Aetna spokesman TJ Crawford believes the company will close the deal with Humana in the second half of 2016. Anthem has not given an official timeline.

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