Antitrust regulators have expressed their worries over Anthem’s proposed acquisition of Cigna and are skeptical that both insurers can offer compromises that would preserve the health insurance industry’s competition, said sources familiar with the matter.
Anthem has asserted that it has minimal overlap with Cigna, geographically and product-wise, to highlight how the deal would not hurt competition. The insurer had also claimed that the deal would lower costs and improve product offerings for all its customers.
Acting associate attorney general Bill Baer warned, however, that such mergers “can give companies far too much power over the markets in which they operate, threatening the principles of freedom and fairness that undergird our economy.”
Representatives of both insurers, Justice Department staffers and dozens of representatives of state attorneys met on June 10 in Washington to discuss the merger, reported
The Wall Street Journal. During the meeting, government officials outlined their concerns about the merger of two of America’s top health insurers.
During the meeting, the Justice Department listed key areas where it claimed that the merger could hurt competition. The national employer market was one key area identified, since according to the officials the deal would lower the number of competitors in that market from four to three. Another point identified was the individual health plan market—Anthem participates in the individual markets of 14 states, while Cigna is on seven, with plans to expand into new states next year. Yet another key area listed was that the merger would have too much power to coerce healthcare providers to lower reimbursement rates.
Mergers can receive government approval if either company involved agrees to concessions such as restrictions on their operations. Government officials, however, told the companies that they were not certain that Anthem or Cigna could offer adequate compromises to make the deal fairer, sources told
The Wall Street Journal.
“We have been in ongoing dialogue with the Justice Department and state regulators regarding the compelling combination of our two companies to increase consumer access to high-quality, affordable health care,” a spokeswoman for Anthem said. “Given that the process is ongoing, it would be inappropriate to comment on our actual discussions.”
Originally, Anthem and Cigna await a decision on the deal by July 2. A source familiar with the matter, however, told
The Wall Street Journal that the companies now expect to hear more details by mid-July.
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