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Feds sue to stop Aetna, Cigna mergers, see possible increased cost

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Federal regulators are suing to stop two major health insurance mergers because they say the deals will increase health care costs for Americans and lower the quality of care they get.

The Department of Justice said Thursday that the combinations of Aetna and Humana and Anthem and Cigna would hurt competition that restrains the price of coverage and lead to reduced benefits, among other drawbacks.

Aetna Inc. proposed last summer to buy Humana Inc. for $34 billion, while Blue Cross-Blue Shield insurer Anthem Inc. moved to acquire Cigna Corp. for $48 billion.

As a result of the suit, the state Insurance Department has suspended its review of the Cigna – Anthem merger application.

Connecticut, along  with the Department of Justice and other states, has filed a federal antitrust lawsuit seeking to stop the proposed merger of Anthem, Inc. and Cigna.

“Both Anthem and Cigna have a significant presence in Connecticut’s healthcare market. According to our analysis, all five of Connecticut’s metropolitan markets would be among the 35 markets nationwide that would be negatively impacted by this merger,” said Attorney General George Jepsen. “We allege in our complaint that, in four particular product areas – national account services; the large group market; plans sold to individuals through public exchanges; and purchase of services of doctors, hospitals and other providers – this merger would eliminate significant competition, leaving employers and individual consumers vulnerable to increased costs and providers subject to decreased rates, with few, if any, options to find better alternatives.”

Industry experts say the impact on consumers would years to materialize and could offer savings in some areas, along with the risk of higher costs elsewhere.

The companies plan to fight the federal suit.