Business-Minded Legal Solutions

Feds block proposed health insurance mergers over competitive concerns

Consolidation of competitors, in any market, is something federal regulators constantly keep an eye on and carefully regulate. This is especially true in an industry like health care, which offers essential services for which consumers often have little bargaining power.

Since January, federal authorities have blocked two proposed mergers of health insurance companies. Last week, a federal judge blocked a proposed merger of Anthem and Cigna on the grounds that it would reduce competition for health insurance and raise prices for consumers. Prior to that, last month, a federal court issued a ruling blocked a proposed merger between Aetna and Humana. 

In the wake of the Aetna-Humana decision, the companies just recently announced that they had mutually agreed to abandon the proposal. Of particular concern for federal regulators with the deal was the reduction in competition, higher prices and also the likelihood of fewer services for Medicare patients.

A merger can be a complicated process to go through, from a legal, financial and practical standpoint. The legal process may require that companies navigate antitrust laws, depending on the parties involved and the specifics of the proposal. Certain large mergers require submission to a review process administered by the Federal Trade Commission and the Department of Justice. That process begins with filing a notice of the proposed deal, which requires preparing the proper documentation. After the paperwork is review, the filing is assigned to either the FTC or the DOJ as the reviewing agency.

In our next post, we’ll briefly look at some of the other steps in the process, and how an experienced attorney can provide solid advocacy for businesses.

Source: Federal Trade Commission, “Premerger Notification and the Merger Review Process,” Accessed Feb. 17, 2017