The decision blocking the merger of Anthem and Cigna will not be publicly available for several days; however, we do have a 12-page order from the court which officially blocks the merger, as well as providing some detail about why the merger was enjoined. Because of the confidential nature of the information involved, the judge sealed the opinion for the time being with the intention of making it available to the public as soon as possible. The parties must submit any notice of objection to unsealing the opinion by close of business tomorrow.
It is clear from the order that the Court finds the merger likely to harm competition. Additionally, the Court wholly refutes the parties' argument that efficiencies would be pro-consumer and a counter-weight to potential competitive problems. Judge Jackson also recognized the highly abnormal relationship between Anthem and Cigna, saying the DOJ was not the only party in the case raising questions about the merger.
Below are three key quotations from the order.
Anthem is asking the Court to go beyond what any court has done before: to bless this merger because customers may end up paying less to healthcare providers for the services that the providers deliver even though the same customers are also likely to end up paying more for what the defendants sell: the ASO contracts that are the sole product offered in the market at issue in this merger. It asks the Court to do this because it is the insurers that negotiate the in-network provider discounts, access to those rates is part of what the customers are buying when they buy health insurance, and medical costs account for the overwhelming portion of any customer’s total healthcare expenditure. In short, Anthem is encouraging the Court to ignore the risks posed by the proposed constriction in the health insurance industry in the relevant market on the grounds that consumers might benefit from the large size of the new company in other ways at the end of the day. But this is not a cognizable defense to an antitrust case; the antitrust laws are designed to protect competition, and the claimed efficiencies do not arise out of, or facilitate, competition.
In short, the Court should decide that the pressure the merger would place on providers would be beneficial to consumers in general. But the record created for this case did not begin to provide the information needed to reveal whether all providers, no matter their size, location, or financial structure, are operating at comfortable margins well above their costs, as Anthem’s expert suggested, or whether Anthem’s use of its market power to strong-arm providers would reduce the quality or availability of healthcare as the plaintiffs alleged. And the trial did not produce the sort of record that would enable the Court to make – nor should it make – complex policy decisions about the overall allocation of healthcare dollars in the United States.
In this case, the Department of Justice is not the only party raising questions about Anthem’s characterization of the outcome of the merger: one of the two merging parties is also actively warning against it. Cigna officials provided compelling testimony undermining the projections of future savings, and the disagreement runs so deep that Cigna cross-examined the defendants’ own expert and refused to sign Anthem’s Findings of Fact and Conclusions of Law on the grounds that they “reflect Anthem’s perspective” and that some of the findings “are inconsistent with the testimony of Cigna witnesses.” Anthem urges the Court to look away, and it attempts to minimize the merging parties’ differences as a “side issue,” a mere “rift between the CEOs.” But the Court cannot properly ignore the remarkable circumstances that have unfolded both before and during the trial.