Just three weeks after Aetna announced it would acquire Humana for $37 billion comes news this past Friday that Anthem will acquire Cigna for $54 billion. Anthem is the country’s second largest health insurer by revenue; Cigna is the fifth largest. The merger will create the nation’s largest health insurance company by membership. The two mergers together consolidates five national insurance players down to three, with UnitedHealth rounding out the list.
In a joint statement released by Anthem, Joseph Swedish, President and CEO said “We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve.” Swedish will remain CEO of the new company. Cigna’s CEO David Cordani will be President and COO. The merger is expected to close in the latter half of 2016.
Within hours of the announcement, Steven J. Stack, MD, President, American Medical Association released a statement on the merger, saying:
“The American Medical Association believes patients are better served in a health care system that promotes competition and choice. We have long cautioned about the negative consequences of large health insurers pursuing merger strategies to assume dominant positions in local markets. Recently proposed mergers threaten to increase health insurer concentration, reduce competition and decrease choice.
“The AMA’s own study shows that there has been a serious decline in competition among health insurers with nearly 3 out of 4 metropolitan areas rated as ‘highly concentrated’ according to federal guidelines used to assess market competition. In fact, 41 percent of metropolitan areas had a single health insurer with a commercial market share of 50 percent or more.” You can read the full AMA statement here.
Lawmakers were also quick to comment. U.S. Senator Richard Blumenthal (D-Conn.) issued the following statement:
“In a market as important to consumers as health care, today’s announced merger between Anthem Inc. and Cigna Corp, and the proposed Aetna-Humana merger earlier this month, will result in a level of market power consolidation that raises serious consumer concerns. The combined effect of these mergers will reduce the number of large, national health insurance providers from five to three – limiting access to affordable health care and raising premiums. These mergers must be seriously scrutinized to ensure that consumers and health care providers are protected from mega-insurer market power abuse.”
Here’s a sampling from Twitter; follow the continuing story at hashtags #Anthem, #Cigna.
[content_box type=”without-header” text_color=”dark” color=”default”]@BloombergBusiness The Anthem-Cigna deal is now linked to Aetna’s bid for Humana, as antitrust officials vow to scrutinize the industry.
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[content_box type=”without-header” text_color=”dark” color=”default”]@NYTimes #Anthem purchase of #Cigna will lead to higher H/C costs, so why will it pass anti-trust? Only 3 insurers left. http://nyti.ms/1IuC00Q
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[content_box type=”without-header” text_color=”dark” color=”default”]@Matt_R_Fisher #Anthem & #Cigna deal set: will be $54B. Now for #antitrust, other regulatory review.
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