Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
July 19, 2016 01:00 AM

Aetna, Anthem mega-deals appear headed for trouble

Bob Herman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Officials with the antitrust division of the U.S. Justice Department likely will file lawsuits this month to block Anthem's $53 billion acquisition of Cigna Corp. and Aetna's $37 billion deal for Humana, Bloomberg first reported Tuesday, citing anonymous sources.

    Halting both major pending health insurance deals would mark a strong antitrust stance in the waning months of the Obama administration—which is fighting to preserve the legacy of the Affordable Care Act and increasingly has cracked down on other large corporate transactions. Seven Democratic U.S. senators have also urged the Justice Department to flex its muscles and stop the mergers.

    Federal intervention would overturn the rulings of many state insurance departments, most of which have approved the mergers. California and Missouri have offered the toughest criticism thus far.

    “The weather in Miami does not tell you at all what the weather will be in Washington, D.C.,” David Balto, a former antitrust attorney for the Justice Department and the Federal Trade Commission, told Modern Healthcare in February after Aetna won a critical approval in Florida. Balto heads the Coalition to Protect Patient Choice, a consumer interest group that is also backed by hospitals, and he has been one of the most outspoken critics of the pending insurance transactions.

    Spokespeople for the Justice Department, Anthem and Cigna declined to comment on the Bloomberg report. Humana, which has had its stock battered over the speculation of its deal not closing, did not immediately respond to a request for comment.

    Aetna spokesman T.J. Crawford said, “We don't comment on rumors or speculation, but we are steadfast in our belief that this deal is good for consumers and the healthcare system as a whole.”

    Both deals have faced immense scrutiny from hospitals, doctors and consumer groups in the 12-plus months since they were announced. Critics have argued the pursuits of Aetna and Anthem to bulk up would result in higher premiums and anti-competitive behavior. But the CEOs of Aetna and Anthem each have said their respective deals would lower healthcare costs and balance out the effects of increased consolidation among hospitals and health systems.

    “These have always been high-risk transactions,” said Ira Gorsky, an analyst at investment brokerage Elevation. “It's a matter of whether or not there's a path to close.”

    Antitrust observers and financial analysts have increasingly viewed the Anthem-Cigna deal as more difficult to complete because it would create a highly concentrated market for employer coverage. It's also unclear how Anthem would resolve issues with the Blue Cross and Blue Shield Association.

    Gorsky believes Aetna's transaction with Humana is more likely to withstand federal pushback, as long as the insurer can prove selling some Medicare Advantage assets to another buyer appeases anti-competitive concerns.

    “We're talking about 350,000 lives,” Gorsky said. “That's an unprecedented amount of lives.”

    The marriage between Anthem and Cigna has been fraught with tension and obstacles from the start, when there was disagreement over whether Cigna CEO David Cordani would take over the combined company after Anthem CEO Joseph Swedish retires. Discord also appeared between the two sides as they worked with regulators.

    Aetna's acquisition of Humana was a clear play for the expanding and profitable Medicare Advantage market, and most people expected divestitures in counties and regions where there was significant overlap between the two.

    “The question has always been would the parties divest enough business to enough buyers to satisfy" the Justice Department, said Jeff Miles, an antitrust attorney with Ober Kaler in Washington.

    Aetna would become the largest Medicare Advantage insurer in the country, but executives argued that it would still only have a nominal slice of the entire Medicare market since seniors and disabled people can still enroll in traditional Medicare. However, many economists and antitrust regulators don't believe Medicare Advantage and traditional Medicare compete with each other.

    If the deals go belly up because of federal regulatory action—and if the insurers decide not to litigate against the Justice Department's decision—Anthem would have to pay Cigna a termination fee of $1.85 billion, and Aetna would have to pay Humana $1 billion, according to terms of their agreements.

    If Aetna or Anthem decide to litigate the matter, it will be an uphill climb. The chances of winning against federal regulators who want to block a merger are “very poor” these days, Miles said.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Shannon Striebich-01_i.jpg
    Trinity Health president speaks on financial problems with new operational solutions
    Mayo Clinic
    Mayo Clinic announces redevelopment at main Rochester campus
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing