•  
  •  
 

Hastings Business Law Journal

Abstract

2015 marked the beginning of a long battle for two major health insurance companies. On July 3, 2015, health insurance giant and third largest health insurance company by revenue, Aetna, announced that it entered into an agreement to acquire the fifth largest health insurance company, Humana, for $37 billion. Following a similar timeline, on July 24, 2015, second largest, Anthem, negotiated an even bigger merger with Cigna, the fourth largest, for $54.2 billion. Officials from all four companies lauded the benefits of the mergers, stating that the synergies between the respective companies would result in enhanced health care access, quality, and affordability for consumers, as well as transform the market to a more “consumer-focused marketplace.” However, many, including the Department of Justice, expressed concerns about the potential impact the proposed mega-mergers would have on competition in the health insurance industry, and issued a block Aetna’s acquisition of Humana, as well as Anthem’s acquisition of Cigna, citing concerns that the mergers would harm competition by reducing the number of large, national health insurers from five to three.

This note analyzes the role of political gaming as it relates to mergers and acquisitions of major health insurance companies and how it can negatively impact consumers. More specifically, this note focuses on the deceptive tactics that Aetna and Anthem displayed in their pursuit of their respective acquisitions. Additionally, this note explains why the Federal Trade Commission and the Department of Justice must investigate these tactics in order to protect competition, prevent further market consolidation, and ensure protection against big corporate insurance. Further, this note explains how transitioning to a single payer system may resolve the issues that stem from the proposed mega-mergers.

Share

COinS