More than a dozen state attorneys general reportedly have joined the U.S. Justice Department's investigation into the two massive insurance mergers in the pipeline. That's likely because they want a say in the terms of any deals struck with the companies—and to score political points.
Relying on unnamed sources, Reuters reported late Monday that about 15 state attorneys general have teamed up with federal officials looking into proposed mergers between Aetna and Humana, and between and Anthem and Cigna Corp. Reuters did not learn the full list of states represented but said they include Connecticut, Florida, Iowa, Massachusetts and Tennessee.
Anthem CEO Joseph Swedish praised the decisions by attorneys general to join the investigation in an interview with Reuters.
“The states created this path with the DOJ to promote education, engagement,” Swedish said. “They develop a lot of insights so that when the DOJ does rule, our work with all of these states is probably enhanced quite a bit because we are not starting from scratch.”
Aetna, according to the story, responded that it's confident the deal will receive “a fair, thorough and fact-based review from the Department of Justice and the states.”
Thomas Greaney, co-director of the Center for Health Law Studies at St. Louis University School of Law, said it's not surprising that state attorneys general would want to join the federal probe.
Local market conditions will be highly relevant to the Justice Department's ultimate decision on the mergers, and the attorneys general can give input about those conditions, said Greaney, who previously served as assistant chief in charge of healthcare antitrust enforcement at the Justice Department.
“They may also have some input into settlement negotiations,” Greaney said.
Rob Fuller, of counsel at the law firm Nelson Hardiman, said the states that joined the investigation likely want to influence divestitures the Justice Department might order in their states. And they may just want to be able to tell voters they worked to protect consumers.
“The attorneys general want to be able to take credit for participating in the consent order,” Fuller said, referring to a negotiated settlement that may follow the investigations. “And they want to be involved in fashioning the policy result for their own states.”
Joining the federal investigation means the state attorneys general will get access to data and analysis gathered by the Justice Department, Fuller said, and the federal government is likely to ask them to help as it divvies up the work of analyzing markets.
Technically, Fuller said, companies can prevent federal antitrust authorities from sharing their data with state attorneys general when they file their Hart-Scott-Rodino notices, which companies of a certain size must file with the Justice Department and Federal Trade Commission before they merge.
Antitrust attorneys typically advise their clients to allow such sharing so they're not subject to multiple subpoenas from the federal government and individual states, Fuller said.
State insurance commissioners are also examining the mergers, and like the Justice Department, they have the power to approve or block them in their states. State insurance commissioners may also set conditions on the deals, such as freezing or limiting premium increases for a set period of time.
On Monday, the American Antitrust Institute, a not-for-profit consumer advocacy group that promotes competition, became the latest group to submit a letter (PDF) to the Justice Department's antitrust division urging it not to let the mergers go forward.
The letter, which Greaney co-authored, argues that the harm to competition won't be outweighed by any efficiencies achieved or “effectively remedied in a way that fully restores competition lost by the mergers.”