The United States Department of Justice has moved to stop the two big mergers of private health care insurance giants. Aetna has proposed to buy Humana and Anthem wants to buy Cigna. On Thursday, the Justice Department filed a lawsuit to stop the mergers saying they would reduce competition and cause higher price in Medicare Advantage plans as well as for the Affordable Care Act and private employers. New York State and ten other states and DC joined the lawsuit Doctor and hospital organizations are also supporting the lawsuit.
The Department has studied the markets served by Aetna and Humana and said that 1.6 million people in 364 counties who are customers of Medicare Advantage would be negatively impacted through reduced competition. Medicare Advantage has consistently been promoted as offering “choice” for older and disabled persons, yet the merger will reduce choices. The companies dispute that and say they would be more efficient.
New York Attorney General Eric Schneiderman announced the state’s participation in the lawsuit saying, “Affordable, quality health care is essential to the well-being of all Americans. Most consumers are covered by insurance plans that their employers choose and negotiate with companies like Anthem and Cigna. By reducing competition, this proposed merger has the potential to significantly increase the merged firm’s power in the marketplace, to the detriment of consumers. Employers will be left with fewer choices, and ultimately consumers could be saddled with higher premium costs, reduced access to providers, and lower quality care.”
Consolidation across the health care field is happening right now as local hospitals are being bought or aligned by larger, regional facilities and doctor groups are being bought by hospitals or expanding themselves. The Justice Department has become more aggressive in the antitrust field, particularly in health care. It has moved to stop some hospital systems from mergers and helped derail the planned merger of Pfizer and Allergan, a plan that would have allowed Pfizer to call Ireland its headquarters and avoid some taxes in this country.