Another Big Merger - Anthem Buys Cigna for $48 Billion
Sacramento, CA - Two more of the nation's biggest health insurers are moving to merge, raising the possibility of a potential fight with antitrust regulators. Anthem said on Friday that it had agreed to buy Cigna for $48.3 billion, finally striking a deal after a nearly yearlong pursuit. Buying its rival, Anthem intends to create a new giant in the sector, gaining greater scale and considerably cutting costs.
But the proposed transaction, coming three weeks after Aetna said it would to buy Humana for $37 billion, could shrink the number of major companies in the health insurance industry from five to just three. And that could mean fewer options and higher rates for consumers and the employers that provide health insurance.
The question now is whether government officials will allow that level of consolidation to pass. The United States Department of Justice and the Federal Trade Commission have become more assertive about challenging merger combinations in recent years, analysts and industry experts have noted.
Together, Anthem, which runs Blue Cross plans in 14 states, and Cigna, which offers insurance plans through employers, would have around $115 billion in revenue. Cigna also has 24 million behavioral health customers, nearly 14 million dental care members, eight million pharmacy benefit plan members and 1.5 million Medicare Part D pharmacy customers.
Peter V. Lee, the executive director of California's health benefit exchange, said the mergers of health plans could counterbalance the growing power of health care providers. "I am far more concerned about the consolidation of hospital and physician groups than the consolidation of health plans," Mr. Lee said. Read More...