California Moves To Block Anthem-Cigna Deal
Source: SF Gate
California joined U.S. Justice Department antitrust lawsuits filed Thursday in an effort to block the merger of two major health insurers — Anthem Inc.’s bid to buy Cigna Corp.
The Justice Department also sued to block Aetna Inc.’s proposed acquisition of Humana Inc., citing concerns that the two megamergers would drastically constrict competition in key markets, drive up premiums and reduce quality.
California Attorney General Kamala Harris said the proposed $48.3 billion merger between Anthem and Cigna, which would create the nation’s largest health insurance company, would “drive up costs to consumers and reduce access to quality health care for millions of Californians.”
“We must not allow insurance companies to grow their profits at the expense of consumers,” she said in a statement. Officials from Harris’ office said the state did not join the federal complaint against the Aetna-Humana deal because of the companies’ limited market share in California.
In addition to California and the District of Columbia, other states joining the lawsuit are Colorado, Connecticut, Georgia, Iowa, Maryland, Maine, New Hampshire, New York, Tennessee and Virginia.
Health care has been undergoing a wave of consolidation, including the recent merger that involved Health Net, which is in Woodland Hills (Los Angeles County), and Missouri’s Centene Corp. In March, Oakland’s Kaiser Permanente acquired Seattle’s Group Health Cooperative.
The proposed merger between Anthem and Cigna, which would cover as many as 53 million people, and the planned $37 billion Aetna-Humana deal have been controversial from the start, with state insurance commissioners, including California’s, questioning the value for consumers.
California Insurance Commissioner Dave Jones on Thursday applauded the federal government’s stance and said the merger, if approved, would do “irreparable harm to consumers and businesses.”
“Bigger is not better when it comes to health insurance mergers,” Jones said. “History has shown that health insurance mergers result in higher prices, fewer choices and lower quality of care.”
Both sets of health insurers opposed the Justice Department’s challenge.
Anthem, based in Indianapolis, called the action “an unfortunate and misguided step backwards for access to affordable health care for America,” and said that it was based on “a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated health care landscape.”
The Thursday news came on the heels of an announcement by Covered California, the state health insurance marketplace created by the Affordable Care Act, that premiums in plans offered to consumers through the exchange will go up by an average of 13.2 percent in 2017 after years of modest 4 percent increases.
“Health care premiums are high enough, without major insurers merging and reducing choice and competition further,” said Anthony Wright, executive director of Health Access California, a consumer group that supported the federal health law. “We hope this action starts a new wave of both federal and state scrutiny regarding consolidation in the health care industry at both the insurer and provider level.”