Eleven months ago four of the country’s largest health insurance companies announced two merger plans to consolidate in what would be among the largest transactions in U.S. history. In early July 2015, Aetna agreed to purchase Humana for more than $37 billion. Later that month, Anthem agreed to purchase Cigna for more than $54 billion.

The merger agreements must be approved by state insurance officials and federal anti-trust regulators. It initially appeared that both deals would survive regulatory scrutiny following strategic divestitures in states where the combined companies would dominate the market. Investors are now increasingly skeptical that these steps will get both deals to the finish line.

Public Criticism

Public opposition to the mergers has been swift and steady. As soon as the deals were announced, the president of the American Antitrust Institute (AAI) criticized the mergers as “more bottlenecking of the health-care supply chain, which we worry about already.” In October, presumptive Democratic presidential nominee Hillary Clinton announced that she was “very skeptical” that consumers would benefit from the mergers, and that the “mergers should be scrutinized very closely.”

The following month the American Medical Association sent a letter to the leader of the Justice Department’s antitrust division, Assistant Attorney General William Baer, expressing concern about mergers’ impact to consumers’ “healthcare access, quality, and affordability.” In January, the AAI sent a fifteen page letter to Baer detailing why it felt the mergers “are likely to substantially lessen competition,” and why “crafting relief that would adequately protect consumer interests is inherently difficult.”

Government Scrutiny

Although critics are targeting both mergers, the Anthem-Cigna merger is under greater pressure at both the state and federal levels. In Connecticut, the Republican Speaker of the House called for the state’s Insurance Commissioner to recuse herself from reviewing the merger because she is a former Cigna lobbyist and her husband still works for the company. The state’s Democratic Governor, Dannel Malloy, is also being criticized for offering to help Connecticut-based Cigna with the merger, even though state officials are supposed to provide an independent review of this type of merger.

Further, California’s insurance commissioner asked the Justice Department to block the Anthem-Cigna merger. He argued that all segments of the state’s insurance markets were already too consolidated, and that “[t]he merger makes that situation worse.” California approved the Aetna-Humana merger with conditions to increase oversight of premium increases. To date, Missouri is the only state that blocked the Aetna-Humana deal and the companies still have time to revise their plan to address the state’s concerns.

At the federal level, government officials privately expressed skepticism that Anthem and Cigna can offer concessions to preserve competition at a June 10 meeting between Justice Department staff and representatives of state attorneys general. No similar criticism of the Aetna-Humana deal was reported from the meeting.

Internal Integration

News has also slowly leaked out that Anthem and Cigna are bickering over a number of critical issues. First, a struggle over the future roles of CEOs David Cordani and Joe Swedish and the number of board seats Cigna would receive delayed the agreement. In March, Anthem sued Express Scripts for $15 billion, which put the future of the carrier’s long term contract with the nation’s largest pharmacy benefit manager in doubt. This reportedly did not sit well with Cigna. In addition, the two carriers are said to be at odds over missed Justice Department deadlines, incorrectly formatted data, flawed white papers, and senior-level departures at Anthem.

In contrast, Aetna’s president Karen Lynch described the process of integrating with Humana as “very collaborative,” and the two companies CEOs have offered “stay bonuses” to ensure “we’re keeping the people we need to keep.” The Aetna-Humana merger has already obtained 15 of the 20 state approvals it needs, and Lynch believes the merger is on track to close later this year. In another favorable development, Aetna sold $13 billion worth of bonds on June 2 to finance the Humana purchase, suggesting the company is not concerned about trouble with regulators.

What’s To Come?

If the Anthem-Cigna merger does not earn regulatory approval, Anthem will owe Cigna about $1.85 billion breakup fee according to the merger agreement. The agreement between Aetna and Humana contained a mutual $1.4 billion breakup fee that will be owed if either side backs out of the deal.

With the Anthem-Cigna merger now in doubt, analysts are already speculating that the insurers may attempt to acquire other carriers if the deal falls through. Cigna could use the breakup fee to help finance the purchase another major insurer such as Wellcare or Molina to bolster its position in the Medicaid and Medicare markets. Anthem could also look to acquire Blue Cross Blue Shield plans in more states or plans that Aetna and Humana may shed to complete their merger. And UnitedHealth Group is reported to be possibly interested again in the now-merged Centene/HealthNet.

Even if regulators shoot down the Anthem-Cigna megamerger, insurance industry consolidation is far from over.