Shareholders with Anthem Inc. and Cigna Corporation overwhelmingly approved the planned merger between the two health insurance giants late last week, though likely battles with the US Justice Department over antitrust issues still remain.
Anthem’s planned $54 billion purchase of Cigna would create an insurer with 53 million policyholders under the company’s umbrella. Anthem operates Blue Cross and Blue Shield in 14 states, and would add membership from Cigna in those states.
Altogether, the combined company would knock UnitedHealth Group into second place among health insurers to become the largest carrier in the country.
With the promise of this expanded footprint, 99% of shareholders with both companies approved the deal and the transaction is expected to close in the second half of 2016, pending the receipt of approval from state and federal bodies.
The transaction comes amid unprecedented consolidation in the sector, including plans from Aetna to buy rival Humana. If all deals go through, the US health insurance industry will no longer be dominated by five leading insurers, but three.
The planned consolidation has elicited concern from federal regulators and trade groups representing medical care providers. The American Medical Association and the American Hospital Association have both urged the Justice Department to consider the proposals with close scrutiny, and presidential candidate Hillary Clinton has made closer review of health insurance mergers a central piece of her campaign.
“These mergers should be scrutinized very closely with an eye to preventing the undue concentration that they appear to create,” Clinton said in a statement. “I am very skeptical of the claim that consumers will benefit from them because the evidence from careful studies shows that too often the companies end up pocketing profits rather than passing savings to consumers.”
The chief executives of Aetna and Anthem have fought against these claims, telling a Senate committee that they are “not at all concerned about a lack of competition in local markets,” and “there are many new players that have entered the market and continue to enter the market.”
Analysts believe the approval of this merger will pave the way for other health insurance deals, including the Aetna-Humana merger.