Anthem-Cigna Breakup Could Prompt Chase for Smaller Acquisitions

As doubts continue to swirl around Anthem’s acquisition of Cigna, a potential breakup would leave both insurers looking to acquire smaller plans, according to Bloomberg.

The Anthem-Cigna merger has been hit with a series of setbacks over the past month, following reports that the two companies have been at odds since the deal was announced. Department of Justice regulators have said they are not optimistic the insurers can find a compromise that will satisfy anti-competition concerns, And earlier this week a Reuters analysis indicated the deal would lead to higher costs for employer-sponsored plans.

Anthem, for its part, has flatly denied any reports that the two companies are walking away from the deal.

However, industry analysts told Bloomberg that if the deal dissolves, both companies would have cash on hand to acquire smaller plans. With a $1.85 billion breakup fee, Cigna could target plans that have established roots in the Medicare and Medicaid markets, like WellCare Health Plans, Centene and Molina (although Centene CEO Michael Neidorff told Bloomberg the company will not be an “acquiree”).

Meanwhile, Anthem could go after any divestures tied to the Aetna-Humana deal.

On Wednesday, a group of 43 consumer organizations and medical associations sent a letterto Justice urging the agency to carefully review the impact both mergers will have on healthcare cost and quality.

The letter noted that state reviews have been shrouded in secrecy, and some states have declined to review the deals altogether. California Insurance Commissioner Dave Jones raised similar cost and quality care concerns in a letter urging the DOJ to block the Anthem-Cigna deal.

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