Proposed Cigna-Humana Merger Raises Stakes for Healthcare Access Amid Election Uncertainty

Cigna Group and Humana are once again discussing a merger that could create a $140 billion insurance giant, further consolidating the U.S. healthcare system. The talks are in preliminary stages after collapsing last December over disagreements about financial terms. FierceHealthcare notes that while discussions have resumed, no formal agreements have been made yet.

The stakes of this merger extend far beyond corporate boardrooms; it directly impacts millions of people's access to essential healthcare services and affordable medications. With Cigna’s Express Scripts commanding 24% of the PBM market and Humana operating the fourth-largest PBM with 8%, the merger raises serious questions about market concentration and its impact on healthcare affordability and accessibility.

Election Outcome Could Determine Merger’s Fate

The timing of the renewed merger talks between Cigna and Humana is no coincidence, occurring just weeks before a presidential election that could heavily influence the merger’s prospects. Bloomberg reports, Wall Street analysts believe that the deal's future hinges on the election outcome, with talks likely "only tangibly moving forward if Trump wins."

Under a Trump Administration, a more favorable regulatory environment might be expected given the GOP's general preference for deregulation. However, skepticism about large corporate mergers from Trump's base and running mate JD Vance complicates this picture. Vance has even praised current FTC Chair Lina Khan, saying she is "one of the few people in the Biden Administration who I think is doing a pretty good job," indicating a potentially less favorable view of healthcare consolidation than the GOP has historically maintained. On the other hand, a Harris Administration would likely continue the Biden Administration's stricter stance on healthcare consolidation, focusing particularly on protecting underserved and rural communities.

TD Cowen analyst Ryan Langston suggests that any formal merger announcement before the election is unlikely, further underscoring the centrality of the election to the deal’s future. Meanwhile, federal scrutiny of pharmacy benefit managers (PBMs) remains high, with the Federal Trade Commission (FTC) accusing the largest PBMs of using negotiation tactics that inflate drug costs, adding another layer of complexity to the regulatory landscape.

Understanding the Scale and Implications of the Proposed Merger

The proposed Cigna-Humana merger would unite two companies with largely complementary business models. Modern Healthcare reports that Cigna dominates in commercial coverage with 16.1 million members, while maintaining a smaller Medicare presence. In contrast, Humana has fewer than 600,000 commercial customers and is withdrawing from employer-sponsored insurance, while standing as the second-largest Medicare insurer with 8.8 million members.

This complementary structure could ease some antitrust concerns, but the combined PBM operations present a more complex challenge. The American Medical Association's (AMA) position on the CVS-Aetna merger highlighted similar concerns, noting that such consolidation can limit competition and reduce patient access to specialty drugs, which may parallel the challenges presented by this merger. Healthcare Huddle's analysis suggests that a merger would create a PBM entity large enough to rival market leader CVS Caremark, potentially controlling 32% of the market. Such concentration in the PBM space has already drawn scrutiny from regulators and policymakers.

To address regulatory hurdles, Cigna is planning to finalize the sale of its Medicare Advantage business to Health Care Service Corporation for $3.3 billion, a move that Modern Healthcare suggests could ease antitrust concerns by eliminating overlapping services. Meanwhile, Humana has faced challenges, with its value dropping nearly 40% this year due to declining Medicare plan enrollments and performance shortfalls resulting in the Centers for Medicare and Medicaid Services (CMS) downgrading their Medicare Advantage (MA) plans’ star ratings.

The combined entity would have a market capitalization of around $121 billion based on October 2024 valuations. While still smaller than UnitedHealth Group's $528 billion market cap, the merger would establish a stronger competitor across both the insurance and PBM markets, potentially reshaping competitive dynamics in the healthcare sector.

PBM Consolidation: Increased Scrutiny as FTC Takes a Stand

The potential merger's impact on pharmacy benefit management deserves particular attention, especially given recent FTC actions against PBMs. Currently, three PBMs control approximately 80% of the market, with Cigna's Express Scripts commanding about 24% and Humana's pharmacy division holding 8% market share, according to Bloomberg Law analysis.

The timing is particularly sensitive given the FTC's September 2024 administrative complaint against major PBMs. As previously reported by CANN, the FTC alleges these companies engaged in anticompetitive rebating practices that artificially inflated drug prices. The FTC investigation has revealed troubling practices, with PBMs frequently prioritizing higher rebates over lower net prices, leading to the exclusion of lower-cost alternatives and driving up drug prices. A combined Cigna-Humana PBM would control 32% of the market, potentially creating an entity large enough to rival market leader CVS Caremark.

This level of concentration raises serious concerns about negotiating power and drug pricing. Bloomberg Law notes that employer groups are particularly wary of the merger, fearing it could make an already complicated market even more opaque for health plans and potentially lead to higher costs for company health plans.

Impact on Healthcare Access and Specialty Care

Healthcare consolidation has long presented significant barriers for patients who rely on specialized care, including those living with chronic conditions like HIV. For example, patients often face more restrictive formularies, meaning fewer options for necessary medications, and increased prior authorization requirements, which can delay access to critical treatments. This is especially problematic for patients with chronic conditions like HIV, where timely and consistent access to specific medications is critical for maintaining health. Research published by Tufts Center for the Evaluation of Value and Risk in Health shows that consolidation often leads to restricted specialty care access, which can be particularly detrimental to people requiring ongoing care management. For instance, patients with cancer may find it harder to access specialized oncologists or newer, targeted therapies due to narrower provider networks and limited formularies. These barriers do more than inconvenience patients—they delay treatments, ultimately impacting patient outcomes.

The National Academy for State Health Policy (NASHP) reports that consolidated health systems frequently use their market power to implement restrictive contracts that can limit patient choice. These contracts often include clauses that prevent insurers from steering patients to higher-value care providers or limit the ability to negotiate better prices, ultimately restricting patient options and driving up healthcare costs. This can particularly impact people relying on specialty medications and services, like those living with HIV who need consistent access to specialists and specific drug regimens.

Consolidated systems often impose more stringent prior authorization requirements and narrower specialty pharmacy networks, as noted in the BMC Health Services Research study. The AMA highlights that merged entities often use their power to make access to specialty drugs more restrictive, which further limits patient options and exacerbates challenges for those needing specialized care. For people living with HIV, disruptions or delays in accessing antiretroviral medications could have serious health implications.

The combined entity's negotiating power could lead to more restricted provider networks. NASHP's research shows that consolidated entities often leverage market power to demand higher reimbursement rates, resulting in narrower networks that limit access to specialists, including HIV care providers.

Navigating Complex Regulatory Hurdles

The proposed Cigna-Humana merger faces significant regulatory scrutiny at both federal and state levels. The merger is likely to undergo a 12- to 24-month regulatory review, particularly given the current antitrust enforcement environment. Regulatory challenges are expected to include a detailed examination of the potential impact on competition, particularly in the PBM market, and whether the merger could lead to increased healthcare costs for consumers. The recent FTC crackdowns on healthcare companies, which could provide additional insights into the type of scrutiny expected during the review, particularly regarding anti-competitive practices and market concentration. Both the FTC and the U.S. Department of Justice are likely to scrutinize any potential overlap in services and demand divestitures to ensure that competition remains intact. Additionally, state-level reviews could require concessions to protect local markets from becoming overly concentrated.

Kaiser Family Foundation's analysis highlights how the FTC and Department of Justice have increased their focus on both horizontal and vertical integration effects. They now examine broader implications for healthcare costs and access, beyond direct market overlap.

State-level review adds another layer of complexity. KFF notes that 34 states and DC require notification of health insurance mergers, with 13 states requiring explicit approval. This multi-state review process could extend the timeline and require concessions to address state-level concerns.

Looking Ahead: Implications for Healthcare Access and Affordability

The proposed Cigna-Humana merger represents more than a business combination—it embodies the tension between market consolidation and healthcare accessibility. While the companies argue that their complementary business models could improve efficiency, the merger's impact on PBM market concentration and healthcare access demands careful scrutiny.

The immediate path forward hinges significantly on the November 5th election outcome, with analysts suggesting meaningful progress is unlikely before then. Beyond the election, the regulatory review process could extend into 2026, as federal and state regulators examine the merger’s implications for competition, drug pricing, and healthcare access.

For healthcare stakeholders, especially those relying on specialty care and medications, the merger’s outcome could significantly impact their care access and costs. The combined entity's expanded market power in both insurance and PBM sectors could reshape provider networks, prior authorization processes, and drug formulary designs.

Advocacy organizations and policymakers must carefully monitor and engage in the regulatory review process to ensure that any approved merger includes meaningful protections for healthcare access and affordability. The FTC’s current focus on PBM practices provides an important opportunity to address long-standing concerns about drug pricing and access in any merger approval conditions.