Anthem Inc said on Friday it might buy Cigna Corp in a deal valued at US$54.2 billion, allowing the largest U.S. health insurer by membership.
The deal – the biggest ever in the health insurance industry – comes three weeks after Aetna Inc decided to buy Humana Inc for US$37 billion and it is part of an industry-wide consolidation following the roll-out of President Barack Obama\’s healthcare law.
Antitrust authorities are required to aggressively scrutinize the way the combinations will affect competition for Medicare and individual and commercial insurance.
By most measures, U.S. insurance financial markets are extremely concentrated. Which means companies might have trouble selling assets if instructed to do so by antitrust regulators.
Anthem said it expects the offer to close within the second half of 2016, indicating a long regulatory road ahead.
Anthem and Cigna are two of just four major insurers that administer self-insured plans for major companies. The other two are UnitedHealth Group Inc and Aetna.
UnitedHealth is currently the biggest U.S. health insurer by membership, while Anthem and Cigna rank No. 2 with no. 4.
\”When you go from four to 3 national players, that produces a significant issue,\” said Matthew Cantor of law practice Constantine Cannon LLP.
Anthem said hello was confident it would get all necessary regulatory along with other approvals.
The combined company might have about 53 million members. UnitedHealth had 45.86 million members by June 30.
Growing concerns about market concentration arrived to sharp focus captured when regulatory concerns scuttled Comcast Corp\’s $45 billion bid for Time Warner Cable Inc.