Federal regulators are suing to stop two major health insurance mergers because they say the deals will increase health care costs for Americans and lower the quality of care they get.
The Department of Justice said Thursday that the combinations of Aetna and Humana and Anthem and Cigna would hurt competition that restrains the price of coverage and reduce benefits, among other drawbacks.
Aetna Inc. proposed last summer to buy Humana Inc. for $34 billion, while Blue Cross-Blue Shield insurer Anthem Inc. moved to acquire Cigna Corp. for $48 billion. The companies said Thursday they plan to fight the federal suit.
Following the federal antitrust lawsuit, "the Connecticut Insurance Department has immediately suspended its review of Anthem’s Form A application," according to spokeswoman Donna Tommelleo.
Connecticut Attorney General Jepsen said his office joined the lawsuit seeking to block the Anthem-Cigna merger on Thursday. Connecticut joined with 11 other attorneys general and the United States Department of Justice to block the proposed merger.
"Following this due diligence, it is our firm belief that, if allowed to proceed, this merger would substantially lessen competition for the provision of healthcare insurance services, in that it would have a negative impact on both the availability of competitively priced healthcare and the quality of care in the state of Connecticut," Jepsen said in a statement on Thursday.
Jepsen said they want the merger between the insurance companies "in violation of antitrust law and to permanently enjoin it from taking place."
"Both Anthem and Cigna have a significant presence in Connecticut's healthcare market. According to our analysis, all five of Connecticut's metropolitan markets would be among the 35 markets nationwide that would be negatively impacted by this merger. We allege in our complaint that, in four particular product areas – national account services; the large group market; plans sold to individuals through public exchanges; and purchase of services of doctors, hospitals and other providers – this merger would eliminate significant competition, leaving employers and individual consumers vulnerable to increased costs and providers subject to decreased rates, with few, if any, options to find better alternatives. Additionally, the merger would remove Cigna, which has been an innovative leader in the industry's move to value-based care, as a competitive force in Connecticut's market," Jepsen said.
Jepsen said they "appreciate" the contributions to the Connecticut community by Anthem and Cigna and "hope that they will continue to grow and prosper in Connecticut in the future."
"That being said, 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," Jepsen said. "Finally, while other states have also joined the Department of Justice in lawsuits seeking to block the proposed merger between Aetna and Humana, Connecticut has not. In many states, Aetna and Humana compete to provide Medicare Advantage plans to consumers. Humana does not sell Medicare Advantage plans in Connecticut and does not currently compete in Connecticut to sell traditional health insurance to the employer or consumer markets. As such, any direct anticompetitive effects of this merger are unlikely to have a significant impact in Connecticut, which is why my office has not initiated similar legal action to block this merger.
U.S. Sen Richard Blumenthal said he thinks a lot is at stake regarding possible merger of two large insurance companies.
"These mergers typically and this one would be no different, threaten jobs, raise prices, reduce quality of healthcare, stifle innovation and investment in the workforce," Blumenthal said.
Meanwhile, lawmakers said they aren't sure if this will ever go through.
"I think the law and the facts are clearly on the Department of Justice's side," Blumenthal said.
Tom Swan, who is the executive director of the Connecticut Citizen Action Group, said we have nothing to gain from this.
"People can be expecting to pay a lot more money and have lot less choice in terms of who they can see and where they can go for care," Swan said.
The Connecticut Citizen Action Group is part of a coalition with Universal Health Care Foundation of Connecticut and the Connecticut Medical Society. The coalition said they are against "these mega-mergers" and applauded the actions by the DOJ.
“The people of Connecticut and the nation now have a major ally in the fight against these mergers. While these mega-mergers once seemed inevitable, when the facts surfaced, it became very clear to the Department of Justice just how harmful these deals will be to everyday people," Frances Padilla, who is president of Universal Health Care Foundation of Connecticut, said in a statement on Thursday.
“This is an important first step in highlighting the significant deficiencies in these proposed mergers, and their negative impact on patient access to care in Connecticut and throughout the county. CSMS has expressed major concerns with giant health insurers becoming goliaths with exclusive or near-exclusive power to dictate price and care delivery to the detriment of patient medical care," Matthew Katz, who is the chief executive officer at the Connecticut Medical Society, said in a statement on Thursday.
“CCAG is pleased that Department of Justice recognized the damaging impact these Wall Street driven deals would have had on our health care system. It is now time for the executives of these companies to live up to their fiduciary responsibility by stop trying to rig the system for short term gain and to seriously work to help make it possible for people to access the care they need at a price they can afford," Tom Swan, who is the executive director of the Connecticut Citizen Action Group, said in a statement on Thursday.
Following the DOJ concerns, Cigna said it is "currently evaluating its options consistent with its obligations under the agreement." The insurance company said it does not believe this transaction "will close in 2016 and the earliest it could close is 2017, if at all."
"Since announcing the transaction, Cigna has remained focused on delivering value to our clients and customers, building on our track record of strong financial results and growing our businesses in the U.S. and abroad. Cigna has remained strong by continuing to invest in innovative solutions to advance the goals of better health, affordability and personalized experience for our clients and customers and continuing to advance innovative approaches to care management, including expansion in collaborative value-based care arrangements with health care professionals across the care delivery spectrum, and designing effective health, wellness and engagement programs for our customers," Cigna said in a statement on Thursday.
Eyewitness News has reached out to Aetna, but have not heard back from the insurance company.
To review the full complaint by the attorney general's office, click here.
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