California

March 29, 2016

On March 29th, 2016, antitrust lawyer David Balto testified on behalf of the Coalition to Protect Patient Choice before the California Department of Insurance Commissioner Dave Jones regarding the proposed merger of Anthem-Cigna. The purpose of this testimony 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 and block the merger. Here are a number of specific points raised:

 

 

  • The Anthem-Cigna merger is occurring during a critical time in our healthcare system. Workers’ contributions to premiums have greatly outpaced wage growth since 2000 and consumers are frequently putting off care due to costs. This increase in consolidation threatens to undo the progress made by the Affordable Care Act.

 

  • California will be substantially impacted by this merger. The Anthem-Cigna merger would create the state’s largest insurer and harm competition in the administrative-services-only market and commercial insurance competition in nine metropolitan areas.

 

  • The mergers will also increase costs for Californians. Numerous studies show that as insurance concentration rises, premiums increase. Concentration is also shown to affect consumer satisfaction, a fact important to Californians considering the many grievances against Anthem and Cigna in the state.

 

  • The efficiencies claimed from this merger are unlikely to benefit Californians. There is no evidence that suggests these efficiencies are passed on to consumers. Indeed, with competition there is little pressure on the parties to do so.

 

  • This deal is a “just say no” type of deal. The harm to consumers created by this merger cannot be fixed by remedies—especially divestitures, which are ineffective and usually fail to restore competition.

 

  • In considering this merger, the California Department of Insurance should ask the following questions: Will the proposed merger harm Californians? And can this harm be remedied through conditions?

 

To see the written testimony submitted to Commissioner Jones please click here.

 

To see the supplemental testimony answering further questions submitted to Commissioner Jones 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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