California

March 03, 2016

On March 3rd, 2016, the consumer groups Consumer Action and the California Reinvestment Coalition filed comments to California Department of Managed Health Care Director Shelly Rouillard regarding the proposed merger of Anthem-Cigna. The purpose of these comments was to raise concerns about the merger and its impact on healthcare in California and to urge the Department to carefully analyze its potential adverse competitive effects. Here are a number of specific points raised:

 

 

  • Health insurance markets in California are already highly concentrated; in 2014 the three largest insurers controlled 68% of the entire commercial health insurance market. The merger between Anthem and Cigna would create the largest insurer in California and raise serious concerns under state and federal antitrust law.

 

  • These mergers would substantially reduce competition within the ASO (administrative-services-only) market, with an Anthem-Cigna company possessing 61% of the California ASO market.

 

  • The mergers would also increase costs for consumers. Health insurance mergers lead to higher premiums, and in California premiums have gone up on average 8.5% per year for the last five years.

 

  • Individuals and organizations are worried that these acquisitions will further reduce network adequacy. This is already a substantial problem in California; a recent study found that 75% of silver plans offered on the California Exchange use narrower networks that only include 25% of fewer of all area providers.

 

  • Divestiture is not an effective remedy for restoring competition in this situation. However the Department has the power to disapprove the merger or develop additional remedies.

 

 

To see the full comments submitted to Director Rouillard please click here.

 

To see the comments submitted by Consumer Watchdog to Director Rouillard, please click here

 

To see the comments submitted by Health Access California to Director Rouillard, please click here

On June 16th, 2016, California Insurance Commissioner Dave Jones released a letter opposing the Anthem-Cigna merger, on the grounds that it was anticompetitive and would harm consumers. He also called on the Department of Justice to block the merger. To read his letter, please click here

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