For several months now, Anthem Inc. was planning to acquire Cigna which is one of its main rivals in the health insurance industry. However, a federal judge has just put an end to the possibility of a major U.S. health merger. On the one hand, a group of specialists condemned the acquisition plan as a way to obtain market dominance. On the other hand, the other side saw this business move as a quality strategy to resuscitate health care industry in America.
On Wednesday, a federal judge ruled against the health merger between Anthem Inc. and Cigna. This is the second legal action this week when the health care industry is blocked from possible beneficial megamergers. The final decision pertained to the U.S. District Judge Amy Berman Jackson. According to her ruling, the contract of $48 billion was in violation of the antitrust law. The main infringement was that of decreasing the number of insurance companies that can serve large national companies.
The same fate had another recent attempt to a health merger between Aetna Inc. and Humana Inc. The judge that handled the case gave a similar decisive ruling as in the situation of Anthem Inc. Despite the fact that the two lawsuits had different natures, the two federal judges sent the same message. They are not going to allow the health care industry to suffer from a too large dominance. Their main concerns were that the prices would skyrocket while the range of offered services would shrink. Their decisions reflect the fear that the benefits of megamergers are not enough to make up for the harm these may bring upon civil communities.
The Wednesday’s ruling sealed the termination of the health merger between Anthem and Cigna for good. While Aetna is deciding whether or not to appeal the lawsuit, the other pair of top industry rivals has high chances not to tackle this topic ever again. Before the lawsuit, Anthem and Cigna faced difficult times imposed by their differences in leadership vision. While both of the organizations aspired to an innovative and multilayered future for the U.S. health insurance, they envisioned too different methods to apply these beneficial changes.
David Cordani, the CEO at Cigna, stated that his company has a capital of $14 billion to deal with the aftermath of a merger failure. The company is going to reexamine the strategic M&A while making sure the shareholders receive their returning capital.
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