Donnelly Ritigstein Law Offices
Call for a Free Consultation
Toll Free 866-907-6368 Local 856-324-6147

Merger between insurance giants struck down by judge

Health insurance is a necessity today. Considering the high cost of health care, many in New Jersey are thankful they have insurance policies that cover some, if not all, of the costs they incur when they visit the doctor or hospital. Therefore, they may be interested to hear that a federal judge blocked the pending merger between health insurance giants, Anthem and Cigna.

The judge determined that the merger would result in a major reduction in competition. As it stands, the companies are just two of four insurers that offer insurance policies to employers with 5,000 or more workers in more than one state.

Moreover, the judge was not convinced by Anthem's claim that the proposed merger would end up saving customers money, through the combination of each company's cost-saving measures. Anthem works with health care professionals to negotiate reduced payments, which would lower Cigna's upfront costs. But, the judge stated that the merger would reduce the companies' chances to test and refine these measures.

In addition, the chief executive officer of Anthem stated that the $48 billion buyout of Cigna would stabilize insurance prices in light of the Affordable Care Act. He stated that the merger would allow Anthem to retain its commitment to the Affordable Care Act's public exchanges. Anthem is still deciding the extent to which it will participate in the public exchanges next year.

This merger is not the only one struck down. In January, a different federal judge struck down insurer Aetna's bid to purchase another insurer, Humana. That merger, which would have resulted in a $34 buyout of Humana by Aetna, was rejected due to competition concerns. According to the judge in that case, current federal regulations would not be able to stop the merged companies from either increasing prices or lowering the amount of benefits offered to policyholders.

It sometimes happens that judges strike down major mergers, such as this, over competition concerns. Companies contemplating a merger should keep this in mind as they move forward. Those with questions or concerns about a pending merger and whether it will be approved may want to speak to an attorney familiar with business and commercial law.

Source: CBS Money Watch, "Anthem-Cigna health insurance merger rejected by judge," Feb. 9, 2017

No Comments

Leave a comment
Comment Information

Moorestown Office
212 West Route 38
Suite 200
Moorestown, NJ 08057

Map & Directions

Haddonfield Office
132 Kings Highway E
Suite 105
Haddonfield, NJ 08033

Map & Directions

Linwood Office
327 Central Avenue
Linwood, NJ 08221

Map & Directions

Cape May Court House Office
618 Route 9 South
Cape May Court House, NJ 08210

Map & Directions

Gloucester, Cumberland and Salem County Offices
57 Euclid St.
Woodbury, NJ 08096

Map & Directions

Back To Top