Aetna-Humana Health Insurance Merger Blocked by the United States

Medical - Pavan Pandey - Jan 24,2017

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aetna humana health insurance merger blocked by the united states

On Monday, a United States judge blocked megamerger of health care company, Aetna Inc. and Humana Inc., raising the stakes for rival Anthem Inc.

A federal judge temporarily blocked the proposed $34 billion megamergers between health insurance giants Aetna Inc. and Humana Inc., ruling that the deal would reduce competition for consumers. The Connecticut-based Aetna said it was considering an appeal. Under the terms of this megamerger agreement, Aetna Inc. owes Humana a $1 billion breakup fee.

The ruling is a win for antitrust enforcement efforts started by the Barack Obama administration. It may augur poorly for the scheduled $48 billion mixture between Anthem Inc. and Cigna Corp., which was confronted by the Justice Department and a ruling is awaited.

Obama’s administration successor, Donald Trump, and a Republican-controlled legislature are looking for undoing much of the Affordable Care Act, known as Obamacare. The ruling redesigned the US healthcare industry by authorizing health insurance and making online interactions where customers can shop for individual policies and catch subsidies.

Aetna, Humana, Anthem and Cigna Corp. had mentioned Obamacare as one of the chief reasons their industry wanted to consolidate to handle with the prices of expanding coverage. On Monday, their shares ended trading at levels that suggested that investors continued to see little chance that the two mixtures would happen.

The United States Justice Department filed a lawsuit last July to block Aetna Inc.’s acquisition of Humana and Anthem Inc.’s acquisition of Cigna Corp., disagreeing that the two deals would lead to higher costs.

Anthem and Cigna Corp. are still waiting for a federal judge to rule on whether their merger can continue.

In his ruling, the US District Court for the District of Columbia, Judge John Bates, said that the proposed agreement would considerably lessen rivalry in the auction of Medicare Advantage plans in 364 provinces in 21 states that the US Justice Department had recognized in its complaint and on the Care Act (Obamacare) exchange in three Florida provinces.