A federal judge on Wednesday ruled against US health insurer Anthem Inc's proposed USD 54 billion merger with smaller rival Cigna Corp, derailing an unprecedented effort to consolidate the country’s health insurance industry.
The US Justice Department sued in July to stop Anthem's purchase of Cigna, a deal that would have created the largest US health insurer by membership, and Aetna Inc's planned USD33 billion acquisition of Humana .
On Wednesday, Judge Amy Berman Jackson of the US District Court for the District of Columbia issued the ruling against Anthem's deal under seal. Last month, a different US judge ruled against Aetna's proposed deal for Humana.
Berman had separated the Justice Department's case into two trials. In one, she weighed arguments over whether the tie-up would hurt the ability of large national employers to get competitive rates for the health coverage they provide workers.
The second trial considered overlaps in the two insurers' business selling health benefits to individuals, and administering Medicare Advantage coverage to the elderly.
Government antitrust officials argued that both deals would lead to less competition and higher prices for Americans. The acquisitions would have reduced the number of large national US insurers from five to three.Cigna is entitled to receive from Anthem a USD1.85 billion break-up fee if the deal fails to win regulatory approval. Officials from both companies were not immediately available for comment.
The Justice Department argued that the deal would likely lead to higher prices for big, nationwide employers whose workers use a broad network of services. It additionally argued that the two companies were the biggest options for large-group employers in at least 35 metropolitan areas.
Eleven states and the District of Columbia joined the Justice Department in fighting the deal.
Anthem has argued that merging with Cigna would allow it to get bigger and push down prices to customers. Anthem, the largest member of the Blue Cross Blue Shield Association, has said it is not truly a national insurance company because it is only in 14 states.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
