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 The formation of a large group to scrutinize Aetna Inc's plan to buy
Humana Inc and Anthem Inc's bid for Cigna Corp complicate what is
already expected to be a tough and lengthy review by federal
antitrust enforcers.
Connecticut, Florida, Iowa, Massachusetts and Tennessee are among
the states that have joined forces to investigate the proposed
deals, according to sources close to the states, who spoke to
Reuters over recent days. Antitrust probes are designed to determine
if a merger would lead to higher prices or otherwise hurt consumers.
The other states participating in the roughly 15-member group could
not be learned. The sources asked not to be named because the
investigation is not public.
The presence of a large number of attorneys general joining a
Justice Department probe underscores the hurdles that both proposed
combinations face in winning U.S. regulatory clearance.
Democratic presidential candidate Hillary Clinton, several lawmakers
and the American Medical Association, a leading physicians group,
have said they feared the pending acquisitions would hurt consumers
by leading to higher insurance premiums or limited access to
healthcare providers.
While it is up to the Justice Department to ultimately decide
whether to file a lawsuit to stop a merger, states provide data to
the department on how the mergers would affect their jurisdictions
and conduct joint calls to gather data from the companies, as well
as critics and supporters of the deals.
One of the most controversial deals last year, the proposed
acquisition of Time Warner Cable by Comcast, attracted about two
dozen state attorneys general who joined the federal antitrust
review. Comcast abandoned the plan in the face of regulatory
opposition.
The chief executive of Anthem, Joseph Swedish, said in an interview
that the decision of the state attorneys general to join with the
Justice Department was “a good thing.”
“The states created this path with the DOJ (Justice Department) to
promote education, engagement. 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,” he said.
Aetna, separately, voiced confidence in the process. "We are
confident that our transaction will receive a fair, thorough and
fact-based review from the Department of Justice and the states," it
said in a statement.
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Humana declined to comment, while Cigna did not immediately respond
to a request for comment.
Anthem announced in July it would buy Cigna for about $54.2 billion
to create the largest U.S. health insurer by membership. The
announcement came weeks after Aetna struck a $37 billion agreement
to buy Humana.
Healthcare insurers say that becoming bigger will allow them to
squeeze out administrative costs, negotiate with doctors and
hospitals and push down the soaring costs of some drugs.
But the American Medical Association estimates that 41 percent of
U.S. metropolitan areas already have a single health insurer with a
commercial market share of 50 percent or more. It believes the
decrease of nationwide health insurers to three from five would make
more regions anticompetitive.
The American Antitrust Institute, in a letter to the Justice
Department on Monday, said the deals would "substantially lessen
competition in numerous health insurance markets."
"The AAI recommends that the DOJ 'just say no' to the two deals that
would fundamentally restructure the nation’s health insurance
markets and create further incentives for 'reactive' consolidation
in the healthcare supply chain," the group said in the letter.
(This version of the story has been refiled to correct to "said in
an interview," not a phone interview, in ninth paragraph)
(Reporting by Diane Bartz; Additional reporting by Caroline Humer;
Editing by Soyoung Kim and Leslie Adler)
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