By Nathalie Voit
In its latest efforts to squash corporate consolidation, the Biden administration filed a lawsuit to block major health insurance company UnitedHealth Group from acquiring rival health technology company Change Healthcare.
The lawsuit, filed by the Justice Department in the U.S. District Court for the District of Columbia on Feb. 24, “alleges that the proposed $13 billion transaction would harm competition in commercial health insurance markets, as well as in the market for a vital technology used by health insurers to process health insurance claims and reduce health care costs.”
The agency said a proposed UnitedHealth Group-Change Healthcare merger would give United, the largest health insurer in the U.S., “access to a vast amount of its rival health insurers’ competitively sensitive information” that it could use to wield an unfair advantage and weaken competition in the health insurance market.
“Quality health insurance should be accessible to all Americans,” Attorney General Merrick Garland said in a DOJ statement. “If America’s largest health insurer is permitted to acquire a major rival for critical health care claims technologies, it will undermine competition for health insurance and stifle innovation in the employer health insurance markets. The Justice Department is committed to challenging anticompetitive mergers, particularly those at the intersection of health care and data.”
The complaint said the proposed deal would give United “a monopoly share in the market” by eliminating United’s “only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year.”
According to the suit, change Healthcare processes about half of all Americans’ medical insurance claims every year. UnitedHealth could exploit this highly valuable data to gain a competitive advantage in the insurance business it could use to distort the playing field to its favor “for the foreseeable future,” the Justice Department said.
A spokeswoman for UnitedHealth subsidiary Optum disagreed with the Justice Department’s claims.
The DOJ’s “deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system,” she said, noting that the company would defend its case “vigorously.”
A representative for Change Healthcare said the health tech firm was still “working toward closing the merger as we comply with our obligations under the merger agreement,” according to The New York Times.
The transaction is the latest deal to face opposition from the White House. On Jan. 3, President Joe Biden signed an executive order to limit corporate dominance in the highly concentrated meatpacking sector after vowing to restore competition across a range of industries.