Aetna, Humana drop merger; Cigna wants to end Anthem deal

Tue Feb 14, 2017 6:30pm EST
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By Caroline Humer and Diane Bartz

NEW YORK/WASHINGTON (Reuters) - Health insurers Aetna Inc and Humana Inc walked away from their $34 billion merger on Tuesday and Cigna Corp sought to end its deal with Anthem, shelving the industry consolidation they charted to address former President Barack Obama's Affordable Care Act.

Humana also said it would exit the Obamacare individual insurance market after this year, saying that early medical costs were running a bit high. Humana was one of several insurers that lost money in 2016 and then cut back offerings for this year, saying the program needs to be changed.

President Donald Trump and Republicans have vowed to repeal and replace Obamacare, the national healthcare reform law that created new individual insurance and expanded Medicaid, adding 20 million people to the ranks of the insured.

Trump on Tuesday tweeted about Humana's decision to exit the market, promising he "Will repeal, replace & save healthcare for ALL Americans."

The insurers, in seeking their mergers, had said the combinations would help them grow after the law changed everything from how doctors and hospitals are paid to the benefits insurers must provide.

The Aetna-Humana and Cigna-Anthem deals were announced in July 2015 and the Justice Department filed antitrust lawsuits a year later seeking to block the deals. Two federal judges separately ruled against the deals in recent weeks.

Government antitrust officials argued that both mergers would lead to less competition and higher prices for Americans, which Aetna and Anthem tried to disprove. The acquisitions would have reduced the number of national U.S. insurers from five to three.

After the defeat in court on Jan. 23, Aetna and Humana said they were weighing an appeal. But they opted on Tuesday to scrap the merger. Aetna shares rose 3 percent to $125.81, while Humana fell 0.4 percent to $205.97.   Continued...

A trader points up at a display on the floor of the New York Stock Exchange August 20, 2012.  REUTERS/Brendan McDermid/File Photo