Justice Department Will Move to Block Two Health Insurance Mergers

health insurance, Naperville business law attorneyShares of four large health insurers fell this week when it was suggested that the United States Department of Justice is planning to file lawsuits intended to block two separate mergers. Over the last several years, the Justice Department’s antitrust division has been taking a stronger stand against business deals that it believes could inappropriately limit competition within a particular industry.

In my practice as a business law attorney, I have helped many clients develop merger proposals and successfully execute the deals. I understand how complicated the process can be, especially when federal regulators show concern about a merger’s effect on competition.

The Health of the Health Insurance Industry

The planned deals would have seen Anthem Inc. acquire Cigna Corp. while Aetna Inc. looked to buy Humana Inc. The result of the mergers would have consolidated the five largest health insurance companies in the country into just three, thereby significantly curtailing competition. According to a high-ranking Justice Department official, the proposed deals would be a “game changer” for health insurance.

The Justice Department’s concerns follow the lead of President Obama’s administration. Earlier this month, President Barack Obama and Health and Human Services Secretary Sylvia Mathews Burwell both made statements about the need for a competitive health insurance marketplace to promote the best interests of consumers.

Patient and Doctor Concerns

As soon as the proposed deals were announced, patient advocacy groups expressed worry about rising health insurance premiums. Less competition often means less incentive to keep prices down. Hospitals and doctors, conversely, were concerned that they would be under more pressure to accept lower reimbursements from the carriers for services provided to patients.

Together, Anthem and Cigna would represent the largest single health insurance company by membership. An Aetna and Humana merger would consolidate two of the largest providers of private Medicare plans. Industry experts say that Aetna and Humana are likely to fight for the deal, while Anthem and Cigna may be more inclined to walk away when the Justice Department’s lawsuit is filed.

Dealing With Governmental Regulation

When you are considering a merger or an acquisition, it is important to remember federal regulatory bodies exist to help ensure the move is in the best interest of the industry and consumers. An experienced Naperville business law attorney can help develop a proposal that meets your company’s objectives as well as antitrust guidelines. Call 630-756-1160 and schedule a consultation at The Gierach Law Firm today to discuss your business plans.

 

Sources:

Chicago Tribune

New York Times

The Street.com