- Just a week ago, the federal judge scheduled to handle two major healthcare insurance M&A cases handed one over to another federal judge to hasten the legal process. Now, that handed-off case has taken a new turn with the Justice Dept. signaling it's open to settlement offers, according to the Chicago Tribune.
- In both the $48 billion Anthem-Cigna case and the $37 billion Aetna-Humana case, the Justice Dept. sued to stop the deals because of anti-trust concerns. But in a Friday hearing, Jon Jacobs, a Justice Dept. lawyer, said the government was open to settlement offers from Anthem to resolve the antitrust lawsuit, the Tribune reports.
- According to the Tribune and legal experts, it's not unusual for for the federal government to consider settlement offers in some large antitrust cases. However, comments at the hearing do not guarantee an agreement will be carved out between Anthem and the government.
Because the deals would cut the number of large, national health insurance carriers from from five to three (UnitedHealth Group, the largest, is the third), the Justice Dept. stepped in. As with most antitrust cases, the government fears a lack of competition and less consumer choice will result, the Tribune reports.
Jennifer Rie, an antitrust analyst at Bloomberg Intelligence in New York, told the Tribune that it makes sense the the Justice Dept. will listen to alternatives, but she didn't want to guess at what might be acceptable to the government to allow the deal to proceed, based on its initial concerns. Judge Amy Berman Jackson told lawyers for the insurers on Friday that the trial would probably begin in mid- to late November and that she couldn't rule on the case before the end of the year.
From the HR and benefits perspective, consolidation could potentially negatively impact healthcare costs in terms of bargaining position. But the efficiencies, along with the expected growth of public healthcare exchanges resulting from Affordable Care Act's recent success with the Supreme Court, could also work in employers' favor.