Feds sue to stop insurance mergers

Associated Press

WASHINGTON, D.C.

The U.S. government is suing to stop two major health insurance mergers, a move regulators say is needed to protect Americans from potential cost hikes and lower quality care.

The Department of Justice said Thursday that the combinations of Aetna and Humana and Anthem and Cigna would hurt competition that restrains the price of coverage and reduce benefits, among other drawbacks.

Aetna Inc. proposed last summer to buy Humana Inc. for $34 billion, while Anthem Inc. moved to acquire Cigna Corp. for $48 billion. The companies said Thursday they plan to fight the federal suit. Anthem, the Blue Cross-Blue Shield insurer, called it “an unfortunate and misguided” step backward for access to affordable care.

Consumers have been dealing with rising health care costs for years, a result of several factors. Prices for prescription drugs and care have risen, and as they have, insurers – who ultimately pay most of the bill – have raised premiums and out-of-pocket expenses such as deductibles to shift more costs to consumers and help protect their own bottom lines.

The big insurers argue that by getting larger, they will be able to negotiate better prices with pharmaceutical companies, hospitals and doctor groups that also are growing. They also expect to cut expenses and add more customers, which helps them better spread the cost of investing in technology to manage and improve care.