Two major health insurance deals that would reshape the industry’s landscape — Anthem Inc.’s purchase of Cigna Corp. and Aetna Inc.’s deal to acquire Humana Inc. — appear to be in trouble amid concerns they would reduce competition.
The Justice Department, which has been reviewing both transactions, is preparing lawsuits to block them, Bloomberg News and the Wall Street Journal reported Tuesday.
A decision whether to file the suits could come as early as this week, and the companies could fight in court or agree to settle, the reports said.
A Justice Department spokesman declined to comment.
Shares of the four companies fell 2% to 4% on Tuesday.
Anthem and Cigna declined to comment. Humana did not respond to email requests for comment.
The Obama administration has been tough on major mergers in various industries, with the Justice Department blocking Comcast Corp.’s purchase of Time Warner Cable Inc. and Halliburton Co.’s acquisition of oil-services rival Baker Hughes Inc., among other deals.
The two health insurance deals were announced a year ago. If approved, they would result in just three companies dominating the U.S. health insurance business. The mergers have drawn opposition from consumer advocates.
In March, Assistant Atty. Gen. William Baer told Congress that the deals would be scrutinized “very, very carefully” because they would be a “game changer” for the industry.
The biggest effect would be from the $48-billion combination of industry giants Anthem and Cigna. The deal would create a company with 53 million members and about $115 billion in annual revenue.
The membership of the combined company would vault it over industry leader UnitedHealth Group Inc., which has about 46 million members. The combination of Aetna and Humana would be No. 3 with 33 million members.
Paul Ginsburg, a professor at USC’s Schaeffer Center for Health Policy and Economics, said he wouldn’t be surprised if the Justice Department sued to block the Anthem-Cigna deal.
“That clearly has potential to reduce competition in the national market where large, self-insured employers get coverage,” he said.
Last month, California Insurance Commissioner Dave Jones urged the Justice Department to block the deal. A state review found that the combined company would control more than half the insurance market in 28 California counties.
“When it comes to the Anthem and Cigna merger, bigger is not better for California’s consumers or the health insurance market,” Jones said.
Aetna’s $34-billion acquisition of Humana is less problematic because its main effect would be in the market for Medicare Advantage coverage, Ginsburg said. That market is regional, which would allow the companies to sell assets in places where both companies have a significant presence in order to allay antitrust concerns, he said.
“The Aetna/Humana merger, which is like many other heathcare mergers, is a local phenomenon and there are clearly remedies” to address antitrust problems, he said.
Last month, the California Department of Managed Health Care approved that deal after Aetna agreed to several conditions, including increased state oversight of rates. But Jones, the state insurance commissioner, called on the Justice Department to block the deal because he said it would reduce competition.
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11 a.m., July 20: This article was updated to note that California Insurance Commissioner Dave Jones also urged the Justice Department to block the Aetna-Humana deal.
This article originally was published at 6:10 p.m., July 19.