Judge blocks Anthem-Cigna insurance merger on antitrust grounds

Late Wednesday, a federal judge blocked health insurer Anthem's $54 billion bid to buy rival Cigna, arguing the merger would reduce competition and likely lead to higher prices for customers. The Justice Department had sued to block the deal last summer, and U.S. District Judge Amy Berman Jackson's ruling follows a different federal judge's decision two weeks ago to block the proposed merger of Aetna and Humana on similar antitrust grounds. If the two deals had gone through, the five biggest U.S. health insurers would have been consolidated into three giant companies.

Anthem and Cigna are trying different business models to reduce costs and improve care, and "eliminating this competition from the marketplace would diminish the opportunity for the firms' ideas to be tested and refined, when this is just the sort of innovation the antitrust rules are supposed to foster," Judge Jackson wrote in her 12-page ruling. "The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: It will eliminate the two firms' vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market."

Anthem did not say if it will appeal the ruling. The American Medical Association cheered the decision as a victory in the "David vs. Goliath battle between consumers and mega insurers."

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