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US federal judge blocks $54bn Anthem-Cigna health insurance merger

IBR Staff Writer Published 09 February 2017

A US federal judge blocked health insurer Anthem from acquiring its rival Cigna, saying that the merger would result in higher costs and less competition.

The proposed merger was said to form the single largest provider of medical healthcare coverage in the country. This, as per the US District Court for the District of Columbia ruling, would have left only four national carriers had the merger deal gone ahead as planned.

While ruling against the merger deal, Judge Amy Berman Jackson said that it would have made the highly concentrated market worsen further and additionally lead to increased pricing in health insurance prices and diminish prospects for innovation.

The merger deal, announced in July 2015, ran into trouble after a lawsuit filed by the US Department of Justice along with eleven states and the District of Columbia.

The parties were seeking to block the deal citing the impact it would have on competition in an already highly concentrated market.

Anthem’s argument was that there was sufficient room for competition as major companies with over 5,000 employees regularly use multiple smaller companies in the national market.

However, Jackson disagreed to it, stating: "Regional firms and new specialized “niche” companies that lack a national network are not viable options for the vast majority of national accounts, and they will not ameliorate the anticompetitive effects of this merger.”

The judge concluded that it was clear that the two insurers do not have to merge to enable customers to access lower provider rates from Anthem.

While Anthem is yet to officially comment on the judgment, Cigna has issued a statement which read: “Cigna intends to carefully review the opinion and evaluate its options in accordance with the merger agreement. Cigna remains focused on helping to improve health care by delivering value to our customers and clients and expanding our business around the world.”

Image: Health insurer Anthem’s merger of Cigna blocked by federal court ruling. Photo: courtesy of everydayplus/Freedigitalphotos.net.