Health Insurance Mega Mergers on Life Support?

Jul 20, 2016

  1. Brian Anderson
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    Brian Anderson Executive Editor

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    It’s appearing less likely with each passing day that either the $48 billion Anthem-Cigna merger or the $37 billion Aetna-Humana merger will happen.

    Bloomberg and The New York Times yesterday both said the U.S. Justice Department is preparing lawsuits to block both deals, saying they would harm competition in the health insurance industry.

    The lawsuits could be filed later this week or early next week. The companies involved will likely fight any government lawsuits that could mean months of litigation. Or they could walk away.

    One interesting part of the Bloomberg article shows Aetna is further along in terms of state approvals and would be more likely to fight the government:

    Aetna and Humana will probably fight any lawsuit in court, while Anthem and Cigna are less likely to litigate against the government, said Ana Gupte, an analyst at Leerink Partners…

    In addition to the Justice Department’s antitrust division, state attorneys general also have raised concerns about the mergers and may join any Justice Department challenge, two people said.

    The insurers need approval from state insurance regulators in addition to the Justice Department. Aetna has secured far more state approvals for its deal than Anthem has, according to analysts at Wells Fargo & Co. Aetna has gotten approvals from 18 of 20 states where regulatory sign-off is needed, while Anthem has regulatory approvals in just 10 of 24 states, analysts led by Peter Costa said in a July 14 research note.


    With all I’ve read opposing them in the past few months I think both deals will be scuttled.

    U.S. Said Readying Suits Against Anthem, Aetna Insurer Deals - Bloomberg

    http://www.nytimes.com/2016/07/20/business/dealbook/anthem-cigna-aetna-humana-health-care-mergers.html?_r=0
     
  2. Yagents
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    Yagents Guru

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    If they block it, i expect a couple carriers to pull out of A.C.A exchanges.
     
    Yagents, Jul 20, 2016
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  3. somarco
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    somarco That Medicare Expert Guy

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    Cigna is almost certain to bail. Humana might since they lost so much in the first 2 years of Obamaturd. Aetna has been a relatively weak player as well.
     
    somarco, Jul 20, 2016
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  4. kgmom219
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    kgmom219 What's Next?

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    I agree on Cigna, but I think Aetna/Humana will happen. Internally and with state DOIs, they are pretty far down the road. (way further than they were with Humana/UHC in 99).

    And if Aetna says "we are pulling out of ACA if this goes through", look for the White House to step in.

    Also, while I think Aetna has been dabbling up until now, we are looking for them to be a major player in DFW and all of TX, based on a hospital chain they just formed an agreement with and their rate filings.
     
    kgmom219, Jul 20, 2016
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  5. somarco
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    somarco That Medicare Expert Guy

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    We will know more in a few months once the dust settles and the carriers let us know who is playing, who isn't.

    I threw Aetna in the mix because they have such a small footprint nationally and this is their third or fourth venture into the IFP market. They never made much of a splash before and certainly haven't this go around.

    Humana has a larger footprint but really was only a factor in 3 or 4 states (Georgia being one of them). But they have been making noises like they want to get out since 2013.

    In truth I don't know why any carrier would be willing to participate in Obamacare. Even Stevie Wonder could clearly see this was a train wreck before it went live in 2014.
     
    somarco, Jul 20, 2016
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  6. kgmom219
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    kgmom219 What's Next?

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    The Blues didn't have much of an option. The Medicaid Plus people are making more than ever.

    What I find interesting is that Group and U65 are merging at Aetna/Humana. Medicare business is not and will operate as 2 separate entities.

    Update: Now I know. If they keep the MAPD seperate, it keeps them at under 5% of Medicare Beneficiaries. Which is a very little number if they are arguing in front of a judge. "What monopoly? We will still have less than 5% of the beneficiaries nationwide after the merger and UHC already has X"
     
    Last edited: Jul 21, 2016
    kgmom219, Jul 20, 2016
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  7. Yagents
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    Both DOJ suits filed today. This pushes any approvals into 2017. If they decide to fight it and go to court, I now doubt any of them will pull their ACA plans for 2017 and piss off more states, DOJ, etc. Commissions should remain too.

    DOJ sues to block both Anthem, Aetna deals | BenefitsPro
     
    Yagents, Jul 21, 2016
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  8. Yagents
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    Yagents Guru

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    Here come the threats:

    Anthem prepping for hardball fight with feds over Cigna deal | Health | postbulletin.com

    -----------------

    Read more: Anthem Turns Less Bullish On Exchanges -- WSJ - NASDAQ.com
     
    Yagents, Jul 29, 2016
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  9. tonyisme
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    tonyisme Guru

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  10. Yagents
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    Yagents Guru

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    Yagents, Oct 12, 2016
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