The mergers, which were announced last summer, would transform the health insurance landscape by consolidating the big five insurers into three companies. Those involved in the deals have argued that the mergers would benefit consumers and shareholders, giving the companies more clout to drive better deals with hospitals and physician groups.
“The fundamental problem here is that entry into the health insurance market is so difficult and so many of those who have tried [have failed] that antitrust officials tend to be extremely skeptical,” said Gene Kimmelman, who served as chief counsel for the Justice Department’s antitrust division between 2009 and 2012. He is now president of Public Knowledge, a public interest group.
“Providing affordable health care has been one of the most important issues over the last eight years.”
Bloomberg, citing unnamed people familiar with the matter, reported that the final decision to move forward with a lawsuit would likely come this week or next.
The companies declined to respond to the report.
“We don’t comment on rumors or speculation, but we’re steadfast in our belief that this deal is good for consumers and the health-care system as a whole,” said T.J. Crawford, a spokesman for Aetna. Humana spokesman Alex Kepnes did not respond to messages.
Anthem spokeswoman Jill Becher and Cigna spokesman Matthew Asensio both declined to comment on the Bloomberg report.
A back and forth between state regulators and big insurers is common during mergers. Typically, companies agree to sell off assets that regulators believe would concentrate too much market power.
But the potential Justice Department challenge is significant. Ana Gupte, a senior analyst with Leerink Partners, said she expected Aetna and Humana to countersue the government if the Justice Department files a lawsuit. Anthem and Cigna could consider the same move, but Gupte said that deal has a smaller chance of winning and the players could simply decide to walk away.
Stock prices for all four companies fell Tuesday.
The Obama administration has become increasingly aggressive at enforcing antitrust rules. Earlier this year, oil services giants Halliburton and Baker Hughes abandoned a $34 billion merger, bowing to Justice Department complaints that the deal would lead to decreased competition and higher prices. In December, General Electric called off the $3.3 billion sale of its appliance division to Electrolux of Sweden after facing resistance from the Justice Department.
Regulators have been particularly concerned about consolidation in the health-care industry. In a May speech, Federal Trade Commission Chair Edith Ramirez said consolidation in the health-care industry is accelerating and has helped drive up prices in parts of the country.
Last year, the number of hospital mergers increased 18 percent compared with the previous year, she said. In areas where there is a hospital monopoly, prices are 15 percent higher than those in areas with four or more competitors, and the average in-patient stay in those places is almost $2,000 higher, Ramirez said.
“While most provider mergers are not anti-competitive, the few that are could cause significant competitive harm,” Ramirez said.