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Anthem-Cigna Merger Blocked

Feb 09, 2017

Predicting diminished competition and likely higher costs, a federal judge rejected Anthem Inc.'s bid to buy rival health insurer Cigna Corp.

U.S. District Judge Amy Berman Jackson on Wednesday said the merger would significantly reduce competition in the already concentrated insurance market, particularly for large national employers. Cigna and Anthem are 2 of just 4 insurers selling to companies with 5,000 employees spread across multiple states, and they compete aggressively for business, the judge wrote.

 

Berman Jackson was unconvinced by Anthem's argument that the merged company could save money for customers by combining the two insurers' different approaches to cost saving. Anthem has negotiated lower payments to doctors and hospitals, while Cigna has higher upfront expenses for wellness in the hopes of reducing future health expenses.

"Eliminating this competition from the marketplace would diminish the opportunity for the firms' ideas to be tested and refined, when this is just the sort of innovation the antitrust rules are supposed to foster," she wrote.

 

Anthem officials are reviewing the decision, spokeswoman Jill Belcher said.