Two major mergers between leading health insurance companies collapsed today after months spent fighting the government in court. Earlier Tuesday a merger between Aetna and Humana was canceled by mutual agreement. Aetna released a statement from CEO Mark Bertolini lamenting the collapse of the deal. “We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations,” Bertolini said. Aetna will pay Humana a one billion dollar breakup fee.
Another mega-merger between Anthem and Cigna was canceled several hours later, this one did not end as well. The Washington Post reports Cigna has filed a lawsuit against Anthem:
In a press release, Cigna announced it had filed a lawsuit in Delaware Chancery Court against Anthem seeking a judgment that the merger agreement had been terminated lawfully and seeking a $1.85 billion termination fee, along with an additional $13 billion in damages.
“These additional damages include the amount of premium that Cigna shareholders did not realize as a result of the failed merger process,” the company said in its release.
For its part, Anthem maintains Cigna does not have the right to cancel the merger.
Former Attorney General Loretta Lynch announced last July that the Department of Justice was filing lawsuits to prevent both mergers, citing decreased competition on the Obamacare exchanges as one reason why the deals should be blocked. Within hours of the announcement by Lynch, Humana announced it was pulling out of most Obamacare markets. A week after the DOJ annouced its lawsuit, Anthem said it would expand its Obamacare offerings but only if the merger with Cigna was allowed to go through. At the time I wrote that Humana had taken a stick approach to the DOJ lawsuit while Anthem had offered the Obama administration a carrot.
A judge sided with the DOJ, blocking the $37 billion Aetna and Humana merger late last month. At the time, an Aetna spokesperson said the company was considering an appeal.
With the apparent collapse of both mergers there is now less incentive for the four separate companies to remain in the struggling Obamacare marketplace. Figures release earlier this month by HHS show Obamacare enrollment was well below expectations during the most recent open enrollment period. United Health, the country’s largest insurer and the only one of the top five insurers not involved in a pending merger, pulled out of the Obamacare market last year.
Update: Humana announced today it is getting out of the Obamacare market. From Fox News:
Health insurer Humana is leaving the Affordable Care Act’s public insurance exchanges for next year as it regroups after ending its proposed combination with rival insurer Aetna.
Also, Trump tweeted this:
Obamacare continues to fail. Humana to pull out in 2018. Will repeal, replace & save healthcare for ALL Americans. https://t.co/glWEQ0lNR4
— Donald J. Trump (@realDonaldTrump) February 14, 2017