Report: Justice Department to Block Aetna, Anthem Mergers

US antitrust officials are ready to file suits to block 2 giant managed care mergers—Aetna’s takeover of Humana and Anthem’s deal to acquire Cigna, according to a report by Bloomberg.

The 2 mammoth mergers would consolidate the nation’s largest insurers down from 5 companies to just 3. Critics of the deals say the mergers would leave the US healthcare system uncompetitive in too many markets, which would drive up healthcare costs for consumers.

Final word on a possible move to block the mergers could come this week or next, according to the Bloomberg report. The US Justice Department did not comment. Antitrust regulators can move to block merger completely or require asset sales in certain markets to keep them competitive.

The deals took shape last summer after the Supreme Court of the United States declined to unravel the subsidies created by the Affordable Care Act, which make policies affordable for low- and middle-income consumers shopping on the federal exchange, HealthCare.gov.

Aetna announced July 3, 2015, that it planned to acquire Humana for $37 billion to create a combined company controlling about 25% of the market. Anthem followed July 24, 2015, with a proposed $54 billion takeover of Cigna, which would create the largest managed care company in the country, eclipsing UnitedHealth Group. The combined Anthem-Cigna company would control 29% of the market, according to Bloomberg data.

Aetna’s interest in Humana would create a company that would get more than half its revenue from Medicare plans, with Humana’s existing Louisville headquarters serving as the hub for Medicare business.

The transactions need blessing not only from the Justice Department, but also from regulators in states where approval is required. So far, Aetna has won approvals in 18 of the 20 states while Anthem has sign off in 10 of 24 states.

The mergers have been opposed by the American Medical Association, which asked antitrust officials to block the deals. The American Hospital Association told its members that a number of US senators have asked the Justice Department to halt the mergers, including US Senator Richard Blumenthal of Connecticut, where Aetna is based.

If the deals fail, analysts have predicted that there will be more buying up of smaller health plans by the remaining giants.