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CA Backs Feds in Anthem-Cigna Merger Trial

News  |  By Doug Desjardins  
   December 06, 2016

The combine would raise costs and reduce choices for consumers, say state officials, researchers, and physician organizations.

The state of California is backing the U.S. Department of Justice (DOJ) as it seeks to block the proposed $45 billion merger between Anthem Inc. and Cigna Corp.

The DOJ filed an antitrust lawsuit against the merger in July and the trial began November 19 in U.S. District Court for the District of Columbia. California Attorney General Kamala Harris has said the merger "would drive up costs for consumers."

California joined 10 other states in supporting the DOJ lawsuit.

Anthem and Cigna contend the merger would create a more efficient company that would generate lower premiums. However, the DOJ alleges the merger would reduce competition and result in higher premiums for policyholders.

"Efficiencies don't count if the only way you get them is more market power," said DOJ Attorney Jon Jacobs in his opening statements.

The California Medical Association (CMA) on November 20 reiterated its position that the merger would likely be bad for consumers because it would create a larger company with more power over the market.

A CMA survey conducted earlier this year found that 85% of its physician members oppose the merger.

"The California Medical Association has opposed the Anthem-Cigna megamerger since day one because it will hurt patients and increase healthcare costs," said Ruth E. Haskins, MD, president of the CMA.

Limiting market competition would compel insurers to contract with fewer physicians, resulting in higher premiums and longer wait times for referrals, not to mention forcing many patients to pay more to see out-of-network doctors, Haskins said.

No theoretical or empirical data support claims that the merger would result in lower premiums, according to healthcare policy expert Gerald Kominski, PhD, director of the UCLA Center for Health Policy Research.

"Monopolistic power increases prices, it doesn't decrease them," he said.

California Insurance Commissioner Dave Jones is also opposed to the merger, which he said would give Anthem a market share of more than 50% in 28 counties in the state and a 40%-or-higher share in 39 counties.

"When it comes to the Anthem and Cigna merger, bigger is not better for California consumers or the health insurance market," said Jones.

The two insurers have a combined total of 8.2 million members in the state. According to data from the California HealthCare Foundation, Anthem has approximately 6.1 million members and Cigna has nearly 2.1 million members.

A second proposed mega-merger, involving insurers Aetna and Humana and worth $37 billion, is also opposed by the CMA and the state Department of Insurance.

However, this merger would impact California to a lesser degree. Aetna currently has about 1.3 million members in the state and Humana has an estimated 513,000 members.

The DOJ also filed an antitrust suit against the proposed Aetna-Humana merger and that trial is expected to begin this month.

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