Dems to DOJ: Block Anthem-Cigna, Aetna-Human mergers

Seven Democratic senators asked the Department of Justice (DOJ) to challenge the pending Anthem-Cigna and Aetna-Humana mergers, arguing the consolidation of these insurers would lead to higher premiums and decreased access to care.

The senators who signed the letter are: Richard Blumenthal of Connecticut, Sherrod Brown of Ohio, Dianne Feinstein of California, Al Franken of Minnesota, Mazie Hirono of Hawaii and both of Massachusetts’ senators, Edward Markey and Elizabeth Warren.

If approved, the Aetna’s $37 billion acquisition of Humana and Anthem’s $57 million deal to buy Cigna would consolidate four of the five largest insurance carriers in the country. The senators argued that degree of market concentration would hurt consumers.

“The merging companies argue that they will use their enhanced market power to secure better deals for consumers by negotiating lower costs and higher quality patient care. However, the evidence overwhelmingly suggests that few if any cost savings secured by the merging firms through the exercise of market power will be passed on to consumers,” the senators wrote. “More troubling is that the exercise of buyer power by the merged firms may exert a ‘waterbed effect,’ forcing providers to increase costs charged to other non-dominant insurers.”

The senators went on to say the mergers remain troubling if considered separately.

For the Aetna-Humana merger, they cited the potential effects on Medicare Advantage (MA) customers with the combined insurer controlling 26 percent of the MA market nationwide. Similar concerns were brought up the Missouri Department of Insurance when it issued an order saying if Aetna and Humana merge, the consolidated insurer can’t do business in the state.

For the Anthem-Cigna deal, the senators would it would reduce “drastically reduce competition” in Blue Cross Blue Shield and “non-Blue” markets.

“A larger, more powerful Anthem-Cigna could have greater ability and incentive to engage in well-documented anticompetitive tactics, such as paying a new entrant to stop competing or using most favored nation (MFNs) contracts with providers to raise costs for rival insurers,” the senators wrote.

California Insurance Commissioner Dave Jones has publicly asked the DOJ to block the deal based on similar anticompetitive concerns.

The group of lawmakers also disagreed with insurers’ arguments that divesting parts of their assets would resolve antitrust issues, calling such moves an “ineffective remedy. They pointed to Aetna’s 1999 acquisition of Prudential, after which its premiums went up by 7 percent.

Aetna spokesman T.J Crawford disagreed with the senators’ arguments, and said the company hopes to close its merger with Humana by the end of the year.

“We believe a combined company is in the best interest of consumers. We continue to cooperate with the Department of Justice on its thorough review of the transaction," Crawford said to Reuters.