Recently, Anthem Inc. had bid to buy Cigna Corp, its rival in the health insurance sector. However, on Wednesday, the federal rejected their bid and gave reasons that it would increase cost, diminish the scope of innovation and decrease competency.
According to Amy Berman Jackson, District Judge of US, this merger would greatly diminish competency in the insurance market, which is concentrated at the moment for mainly national employers. He also said that Anthem and Cigna are 2 of the 4 insurers that are selling to the companies that have a workforce of 5,000 employees spread across many states and are extremely aggressive about the expansion of their business.
Anthem justified that the merger company would save money of the customers by combining the money-saving strategies of both the companies, but the judge was not convinced. Anthem will reduce payments to hospitals and doctors and Cigna will incorporate better upfront for reducing the expenses in future.
Jill Belcher, a spokesperson said that the officials of Anthem are reconsidering their decision and proposal.
Even in the last month, the merger between Aetna and Humana had been rejected by another judge. Aetna had offered a bid of approximately 34 million dollars to buy Humana.
If these two mergers had taken place, then the five biggest insurers of the world would have been consolidated, including UnitedHealth Group Inc, which is the largest at the moment.
The insurers justified that if they get bigger by merging, then they will aim to negotiate for reasonable prices with hospitals and pharmaceutical companies that are growing rapidly. They are planning to invest more in technology and follow a customer-oriented approach, which will reduce the expenses and help get more number of customers.
The experts in this industry have stated that such deals cannot be materialized so soon and will take many years before they start benefiting the customers and begin reaping profits. The experts also say that they might bring out some amount of savings in few areas, but they would lead to increasing costs in all the other areas.
Even the American Medical Association supported the verdict of the federal judge and said that such mergers would cause the companies to expand so massively that it will become an immensely tedious task to maintain, regulate, and control the operations smoothly.
The American Medical Association President, Dr. Andrew Gurman also commented that the merger between Anthem and Cigna would definitely cause and pose a severe threat to health care. The threats will be in areas like affordability, accessibility, and quality that customers experience in the health insurance sector.