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Health Insurance Company Mergers: A Cause for Antitrust Concerns?

Recently, there have been two significant proposed mergers between large health insurance companies – the acquisition of Humana Inc. by Aetna Inc., and the acquisition of Cigna Corp. by Anthem Inc. Significantly, these mergers would result in 42% of the nation’s population being covered by only three insurance companies. This has led to increased antitrust concerns, with the American Medical Association, as well as several lawmakers, stating that they fear the pending acquisitions would lead to higher insurance premiums or limited access to healthcare providers. As a result, about fifteen state attorneys have joined the Justice Department’s probe of the mergers, including Connecticut, Florida, Iowa, Massachusetts, and Tennessee.

Both Anthem and Aetna have expressed confidence that the proposed transactions will be approved. The insurers claim that becoming bigger will allow them to reduce administrative costs, and provide them with the ability to negotiate with physicians, hospitals, and drug companies to reduce the cost of care. On the other hand, the American Antitrust Institute has recommended that the DOJ “just say no” to the two deals, as they would “substantially lessen competition in numerous health insurance markets.” Nonetheless, until the DOJ ultimately decides whether or not to prevent the mergers, it is prudent for health care providers to be aware of these potential transactions, as they will substantially reshape the health care market.