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Predicting diminished competition and likely higher costs, a federal judge rejected Anthem Inc.'s bid to buy rival health insurer Cigna Corp. U.S. District Judge Amy Berman Jackson on Wednesday said the merger would significantly reduce competition in the already concentrated insurance market, particularly for large national employers. Cigna and Anthem are two of just four insurers selling to companies with 5,000 employees spread across multiple states, and they compete aggressively for business, the judge wrote. (Cooper, 2/9)

The ruling, by Judge Amy Berman Jackson of the Federal District Court for the District of Columbia, came two weeks after another federal judge blocked a proposed $37 billion merger between Aetna and Humana on antitrust grounds. Judge Jackson wrote in her order that she found the Justice Department’s arguments against the deal persuasive, and that putting Anthem and Cigna together would harm customers. (de la Merced and Picker, 2/8)

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” Judge Jackson wrote. (Kendall and Wilde Mathews, 2/9)

The question now becomes what the companies will do with the large piles of cash they allocated for the acquisitions, and whether they’ll try anew at fresh takeovers under a Trump administration, whose antitrust officials could be more amenable to large consolidations. They could also opt for something more conservative in the face of widespread uncertainty about the future of the U.S. health system. (Tracer, McLaughlin and Harris, 2/8)

The judge also said Cigna, which has long shown lukewarm commitment to the merger, is “actively warning against it.” During the trial, Cigna officials presented “compelling testimony” that undermined the projections of future savings that would result from the merger. The two also have deep disagreements in strategy. Anthem attempted to cast these differences as a “side issue,” according to the order. (Livingston, 2/8)

The court’s order will help preserve competition in 35 regional markets where both companies operate. (Nicholson, 2/8)

Anthem can appeal the ruling, but it faces a tight timeline. At the end of April, either of the merging companies can pull the plug on the deal, and Cigna is expected to do so immediately. That would trigger a $1.85 billion breakup fee that Anthem would owe to Cigna. This is the second blockbuster merger to be thwarted. Last month, Aetna's $37 billion takeover of Humana was also blocked. (Demko, 2/8)

Senate Majority Leader Mitch McConnell (R-Ky.) last year called the Aetna-Humana merger “the inevitable result of Obamacare’s push toward consolidation as doctors, hospitals, and insurers merge in response to an ever-growing government.” (Sullivan, 2/8)

Nationally, Anthem covers 40 million Americans, and Cigna covers 13 million. The merger would have produced the nation’s largest health insurer, eclipsing the current reach of United Healthcare. (Radelat, 2/8)