Principal Deputy Associate Attorney General Bill Baer Delivers Remarks at Press Conference Announcing the Justice Department’s Actions to Block Aetna’s Acquisition of Humana and Anthem’s Acquisition of Cigna
Remarks as prepared for delivery
Good morning. And thank you Attorney General Lynch for those powerful remarks. The American public benefits from your leadership and your consistent support for vigorous antitrust enforcement.
The two mergers we and our state attorneys general colleagues are challenging today – involving four of the five largest health insurance companies in the country – are unprecedented in their scale and in their scope. They put at risk the system that Americans across the country rely on to pay for their healthcare – threatening to increase insurance premiums, reduce benefits, lower the quality of healthcare, and slow innovation. These insurance companies are already some of the largest, most sophisticated companies in the country; they are thriving as independent firms; they do not need these deals to survive; and consumers deserve to benefit from their continued competition.
Our investigation showed that these mergers are likely to harm competition that currently benefits seniors, working families and individuals, employers, the previously uninsured and underinsured, as well as doctors and hospitals. If allowed to proceed these mergers also would cut off innovation and competition American consumers otherwise would enjoy in the future.
Each of these deals poses unacceptable risks to competition. Let’s look first at Anthem’s purchase of Cigna. Right now half of all Americans get health insurance through their employers. For the largest, most-sophisticated employers with multiple locations around the country there are only four good choices – and two of those are Anthem, together with its Blue Cross allies and Cigna, which Anthem wants to eliminate as a rival. Similarly for large but more regional employers – including those located in some of the biggest cities in the country, such as New York, Los Angeles and Atlanta – we see the same thing: Anthem and Cigna are two of just a handful of options for employee health insurance. Anthem’s effort to buy Cigna affects both price competition and quality competition. Cigna’s efforts to innovate – particularly its efforts to collaborate with doctors and hospitals on wellness programs – have proven popular with lots of employers and their employees. And so Anthem has had to compete harder – by keeping its prices down and by adopting its own innovative strategies – to prevent Cigna from winning away these contracts. Today Anthem also competes with Cigna to sign up the doctors and hospitals needed to provide a comprehensive healthcare network. All this competition would be lost as a result of the merger.
Now Anthem claims that consumers will benefit if it becomes the 800-pound gorilla at the bargaining table – forcing cost concessions from doctors and hospitals without regard to the impact those concessions would have on the quality of medical care. The antitrust laws don’t work that way – you don’t get to buy a competitor, and eliminate substantial competition, just to increase bargaining leverage with healthcare providers. Allowing just one company, Anthem, to dictate how much doctors get paid and employers get charged isn’t good for either doctors or employers. And it certainly is not good for hard working Americans who rely on their employers for health insurance.
Let me turn to Aetna’s effort to acquire its competitor Humana. Our investigation showed that Aetna's acquisition of Humana would hurt seniors who rely on Medicare Advantage for their health insurance. Congress created Medicare Advantage in 1997 to provide a market-based alternative to traditional Medicare. Today seniors in the Medicare Advantage program benefit greatly from competition between Humana and Aetna, as both companies have fought to expand enrollment and compete in more counties across the country. Now Aetna proposes to eliminate Humana as a fierce rival. That means that seniors in places like Sioux City, Iowa, or Joplin, Missouri, or Lenoir, North Carolina won’t have any meaningful choices when they go to sign up for a Medicare Advantage plan. And seniors in many other areas will also see their choices limited, their benefits reduced and their premiums go up.
In addition to the many problems I have just outlined, these two mergers both threaten to reduce competition for the many Americans who obtain health insurance through public exchanges established by the Affordable Care Act. These four companies have been among the most active in offering insurance through the exchanges. In particular, families and individuals in cities like St. Louis, Denver and Jacksonville today benefit from competition between Anthem and Cigna and between Aetna and Humana to deliver access to affordable, adequate health insurance coverage. I am talking about average Americans in these cities, many previously uninsured or underinsured, who are most vulnerable to increases in insurance premiums. But that’s exactly the risk posed by these two mergers for consumers who today rely on the exchanges.
Both Anthem and Aetna have claimed they can “fix” the problems these mergers cause by divesting bits and pieces of their businesses to smaller insurers. But those proposed remedies are incomplete and impractical; they would not give the buyers of the divested assets the necessary tools to compete with the intensity that Cigna and Humana provide today; and they would leave consumers at risk. Those are so-called solutions we cannot accept.
That is why we are asking the court to block both mergers. Our lawsuits aim to protect the many Americans who depend on these four health insurers for access to affordable, high quality health care. Aetna's acquisition of Humana and Anthem's acquisition of Cigna may be a convenient short-cut to increased profits for those companies. But the antitrust laws make clear that mergers are not lawful when they risk denying consumers the benefits of competition.
I want to conclude my remarks by echoing the Attorney General’s thanks to the team of lawyers, economists, paralegals and support staff at the Antitrust Division, and to our colleagues among the states' attorneys general, for the hard work that went into their thorough investigations and into filing these lawsuits today.
Updated September 28, 2016