US court hinders Anthem-Cigna deal worth $54 billion

Market - Mohit Shah - Feb 09,2017

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us court hinders anthem cigna deal worth 54 billion

U.S. health insurer Anthem’s suggested merger with small rival, Cigna, worth $54 billion was blocked by a federal judge.

The U.S. Justice Department sued in July to restrict Anthem-Cigna deal; an agreement which would have formed the largest U.S. health insurer by membership, and Aetna's strategic $33 billion purchase of Humana.

On Wednesday, Amy Berman Jackson, Judge at the U.S. District Court for the District of Columbia delivered the ruling against Anthem's agreement under seal. Last month, a distinct U.S. judge ruled against Aetna's proposed deal for Humana.

Berman had divided the Justice Department's case into two trials. In one, she evaluated arguments over whether the tie-up would upset the ability of large national employers to acquire competitive rates for the health treatment they provide workers.

The point of consideration in the second trial focused on the overlaps in the two insurers' business vending health benefits to individuals, and managing Medicare Advantage coverage to the elderly.

The argument of the government antitrust officials was based on the fact that both deals would cause less competition and higher prices for the American population. The acquisitions would have decreased the number of large national U.S. insurers from the count of five to three.

The Justice Department argued that the deal would likely lead to rising prices for superior, nationwide employers whose workers practice a broad network of services. Moreover, an additional argument was also placed hat the two companies were the major options for large-group employers in about 35 metropolitan areas.

On the other hand, Anthem has claimed that merging with Cigna would permit it to get bigger and press prices to customers. Anthem, the biggest member of the Blue Cross Blue Shield Association, said it is not actually a national insurance company because it is functional only in 14 states.