Sutter Health Care Audit

Clayton Act – Anthem, Cigna, Aetna, and Humana Mergers

In 2015 it was a record year for mergers in the healthcare industry. In 2016 we are on par for a very similar year. This is how business is being conducted nowadays with additional restraints due to the Affordable Care Act on healthcare organization trying to make ends meet. Interestingly, some of the largest health insurance companies in our country are attempting to merge together. These include Anthem, the largest of the Blue Cross/Blue Shield plans, acquiring Cigna for $54 billion, as well as Humana being acquired by Aetna for $39 billion (Beresford 2016). It is important to note that these are four of the top five largest national insurance plans. If the Department of Justice decided not to file an injunction in Federal court against both of these mergers we would have been left with three mega-insurance companies as opposed to the five we currently have. Attorney General Loretta Lynch filed these suits citing that “these mergers would restrict competition for health insurance products…increase concentration, and decrease incentives to innovate” leading to a lower quality of care (Beresford 2016). Upon analysis it is evident that the merging of these companies directly harms competition in many markets across the country. As such these deals are in direct violation of the Clayton Act, which can be seen further when analyzing the acquisition through the lens of the 1992 Department of Justice/Federal Trade Commission Horizontal Merger Guidelines (Cleverly 2011). Currently a hearing in federal court will take place on December 5th for the Aetna Humana merger case which should have a result about a month or so later. The merger of Anthem and Cigna is still not on the docket.

References

Cleverly,W, Song,P , Cleverly, J. (2011) 'Essentials of Health Care Finance, Seventy Edition'. Sudbury, MA. Jones& Bartlett Learning

Loria, K. (2016) “Will Aetna, Humana merger go through?” Modern Medicine Network. August 24, 2016. http://medicaleconomics.modernmedicine.com/medical-economics/news/will-aetna-humana-merger-go-through

Hayden, C. (2016). Healthcare mergers and acquisitions in 2016: Running list. Healthcare finance Online. August 1 2016.

Beresford , L (2016). DOJ Files suit against two mega mergers. Modern Medicine Network. August 3, 2016. http://medicaleconomics.modernmedicine.com/medical-economics/news/doj-files-suit-block-two-mega-mergers-health-plan-giants