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Aetna and Anthem Insurer Deals to Be Challenged by US DoJ
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According to Bloomberg, regulators are getting ready to file lawsuits in order to block two major health insurance mergers. About a year ago, Anthem agreed to purchase Cigna (CI - Free Report) for $48 billion, and Humana (HUM - Free Report) agreed to be bought out by Aetna for $37 billion.
The Justice Department is concerned over the increased consolidation in the health insurance space, and it believes that these mergers stand to negatively affect the competition in the industry. The companies who are set to merge already make up for four of the top five players in the health insurance space, and collectively, the companies generated sales north of $230 billion in 2015.
They represent a large share of the health insurance market, and the deals have been criticized since their inception a year ago. Doctors and consumer groups have been especially critical of the deals, citing the lessening of competition in the space because of fewer options for people to choose from. James King, a professor at the University of California Hastings College of Law, questioned the impact that the mergers have on competition, saying that “instead of going into these areas on their own, (the insurers) are attempting to acquire somebody who is already there and successful”.
Regulators were previously worried when the deals were announced, but Aetna and Anthem had the opportunity to persuade the Justice Department, and they said that any antitrust issue could be resolved by distributing assets to other competitors. If the Department does end up filing a lawsuit, the insurers will probably fight the antitrust claims in court.
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Aetna and Anthem Insurer Deals to Be Challenged by US DoJ
According to Bloomberg, regulators are getting ready to file lawsuits in order to block two major health insurance mergers. About a year ago, Anthem agreed to purchase Cigna (CI - Free Report) for $48 billion, and Humana (HUM - Free Report) agreed to be bought out by Aetna for $37 billion.
The Justice Department is concerned over the increased consolidation in the health insurance space, and it believes that these mergers stand to negatively affect the competition in the industry. The companies who are set to merge already make up for four of the top five players in the health insurance space, and collectively, the companies generated sales north of $230 billion in 2015.
They represent a large share of the health insurance market, and the deals have been criticized since their inception a year ago. Doctors and consumer groups have been especially critical of the deals, citing the lessening of competition in the space because of fewer options for people to choose from. James King, a professor at the University of California Hastings College of Law, questioned the impact that the mergers have on competition, saying that “instead of going into these areas on their own, (the insurers) are attempting to acquire somebody who is already there and successful”.
Regulators were previously worried when the deals were announced, but Aetna and Anthem had the opportunity to persuade the Justice Department, and they said that any antitrust issue could be resolved by distributing assets to other competitors. If the Department does end up filing a lawsuit, the insurers will probably fight the antitrust claims in court.
The Zacks Rank is a truly marvelous trading tool. Our ranking system has beaten the S&P 500, yielding an average return of 25% per year for the last 29 years! Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>