Nothing is official yet, but The Wall Street Journal reports that federal regulators have privately voiced concerns about Indiana-based Anthem's proposed $48 billion acquisition of Connecticut-based Cigna.
Just days after California's insurance commissioner urged federal regulators to reject the deal, sources tell the Journal that federal officials are skeptical about whether the two companies would be able to assuage the anti-trust concerns raised by the prospect of a merger between the country's second and fourth largest health insurers.
If the deal goes through, the new company would displace Minnesota-based UnitedHealthCare as the largest insurance provider in the country, with over 54 million policyholders and over $100 billion in annual revenue.
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The sources indicated it was unlikely that the companies would be able to reach a compromise through the usual means, such as selling off assets to reduce the size of the newly formed company.
Anthem has continued to insist that the deal will benefit consumers.
"We have been in ongoing dialogue with the Justice Department and state regulators regarding the compelling combination of our two companies to increase consumer access to high-quality, affordable health care," an Anthem spokeswoman told the Journal. "Given that the process is ongoing, it would be inappropriate to comment on our actual discussions."
Insurance companies pushing for mergers have argued that mergers increase their negotiating power with providers, resulting in lower health care costs for consumers. It's an argument that very few consumer advocates find convincing.
Although politicians and advocates have been raising alarms for nearly a year about the Anthem-Cigna merger, as well as a similar proposed merger of Aetna and Humana, industry insiders voiced optimism about the deals getting the OK from the feds until very recently.
The first bad sign for the insurers came last month, when Missouri regulators said that, in the event of an Aetna-Humana merger, the two companies would be barred from offering certain types of insurance in the state.
But people really started to pay attention last week, when the California Insurance Commissioner publicly urged the federal government to block the Anthem-Cigna deal, saying that the newly-formed company would severely restrict competition in the country's largest state.
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