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DOJ sues to block major CT insurance mergers

BY Joe Cooper
Matt Pilon

7/21/2016
Matt Pilon
Matt Pilon
Aetna's Hartford headquarters on Farmington Avenue.
The U.S. Department of Justice on Thursday filed antitrust lawsuits seeking to block Anthem's acquisition of Cigna and the merger of Aetna and Humana. As a result, Connecticut insurance regulators say they have immediately tabled their review of Anthem's application.

The federal complaints, filed in federal court in Washington, D.C., claim the respective $54 billion and $37 billion deals would lessen competition and lead to higher prices.

While Connecticut, through Attorney General George Jepsen, is one of 11 state co-plaintiffs challenging the Cigna acquisition, Jepsen said he chose not to oppose the Aetna merger because he did not anticipate anticompetitive effects in Connecticut, where Humana isn't an Aetna competitor.

Cigna said in a statement that it's evaluating its options, but said the suit would at the very least delay the deal's previous timeline.

"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," Cigna said.

In a statement, Anthem called the DOJ's suit "unfortunate and misguided step backwards for access to affordable healthcare for America" and alleged that it's based on a "flawed analysis and misunderstanding" of the healthcare market.

Anthem said it's committed to challenging the complaint in court and is receptive to reaching a settlement to complete the proposed deal.

Aetna and Humana issued a joint statement Thursday saying they plan to vigorously defend the suit. They said the facts do not support the DOJ action, citing robust competition in Medicare; regulators in 18 of 20 states have approved the transaction. The two companies said perceived competitive concerns could be addressed through divestitures. The statement said a combined company is in the best interest of consumers, particularly seniors seeking affordable, high-quality Medicare Advantage plans.

In the complaint challenging the Anthem-Cigna deal, the DOJ said the acquisition, if allowed to proceed, would enhance Anthem's power to profit at the expense of "millions" of consumers and the doctors and hospitals providing their medical care.

The proposed deal would be the largest in the history of the health-insurance industry.

The DOJ alleged that Anthem's purchase of Cigna would eliminate it as a competitive threat and substantially lessen competition in numerous markets around the country. According to the suit, without the merger, Cigna expects to double in size in the next seven to eight years.

Attorney General George Jepsen, who indicated earlier this month that he might oppose the Anthem-Cigna deal, said in a statement Thursday that the acquisition, if allowed to proceed, would substantially lessen competition for health insurance and have a negative impact on both the availability of competitively priced health care and the quality of care.

He said the acquisition is a violation of antitrust law and wants both sides to be permanently enjoined from proceeding. Jepsen said all five of Connecticut's metropolitan markets would be among the 35 markets nationwide that would be negatively impacted by lessened competition.

Jepsen added, "No remedy has been proposed by either party that would address the potential harm to competition in Connecticut's healthcare insurance market that this merger would cause, and I believe the law in this case is clear."

The suit said, "Cigna increasingly competes head to head with Anthem by finding innovative ways to lower its customers' medical costs. These efforts have been well received by consumers and healthcare providers, pressuring Anthem to respond."

According to the DOJ, Anthem "has ... earned a reputation in many markets for having poor customer service, being slow to innovate, and being difficult to work with for doctors and hospitals."

Connecticut's Insurance Department said in a terse statement Thursday that "it has immediately suspended its review of Anthem's Form A application'' due to the federal antitrust lawsuit.