Good Riddance: Anthem-Cigna Deal May Be Falling Apart

June 30, 2016

 

Anthem and Cigna could be backing away from their attempted merger, which has faced a tsunami of opposition from consumer advocates, doctors, hospitals, and legislators. Good riddance. Antitrust regulators, including state and federal antitrust enforcers, state insurance commissioners and others have been wary of the deal and expressed concerns that it would harm consumers and lead to too much concentration in an already poorly functioning health insurance industry. They also doubt that remedies are capable of solving the competitive problems resulting from the merger.

 

According to two sources, Anthem CFO John Gallina told analysts last week that Anthem was perhaps looking elsewhere for rosier acquisitions. Staff vice president of communications at Anthem denied the report, saying that “the completion of the Cigna acquisition is the highest priority for Anthem” and that the company “continues to be in ongoing dialogue with the Department of Justice and state regulators.” Cigna declined to comment on this information.

 

It’s unfortunate Anthem continues on this path toward regulatory doom. No wonder they don’t give up the candle. They have spent more than $139 million in legal and lobbying fees, and they will have to pay Cigna a $1.85 billion break up fee. But throwing good money after bad isn’t going to change this result.

 

That’s because the facts are simple. Every major health insurance merger has led to higher premiums and worse service. This deal would create a health insurance giant and, as California Insurance Commissioner Dave Jones demonstrated, the companies can’t even suggest how there will any savings that will benefit consumers. That’s why consumer groups and unions have filed comments in almost a dozen states raising concerns about this merger.

 

Rather than spending its money trying to convince regulators to ignore their obligation to protect consumers, Anthem should focus on what the market demands – better service and lower prices. That is what competition is about.

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