Anthem’s Proposed Cigna Purchase Opposed

June 22--Anthem's plan to purchase rival Cigna and create the largest health insurance company in the country is running into increased opposition as the $48 billion proposition, announced on July 24, moves down the regulatory tracks at both the federal and state level.

In New Hampshire, opponents are still waiting for the Insurance Department to schedule a promised public hearing, which now appears to be weeks away, even though a U.S. Department of Justice decision on the merger could come as early as mid-July.

The proposed merger would hurt New Hampshire more than any other state served by the two companies, according to an analysis by the American Medical Association, released soon after the proposal was announced. If merged, the combined company would control nearly 64 percent of New Hampshire's health insurance market, well in excess of federal antitrust guidelines.

The state hospital association, its psychiatric society, medical society and physical therapy association have all filed comments with the state Insurance Department in opposition, as have private citizens and lawmakers.

Republican state Rep. Neal Kurk, chairman of the House Finance Committee and Fiscal Committee, believes a combined Cigna and Anthem could control more than 64 percent of the health care insurance market in the state, when including individual and corporate policies, and administration of self-insured plans.

"Any merger that puts (so much) of the health care insurance market in the hands of a single entity will, as a matter of economics and law, raise prices for insureds beyond what they would be in the absence of such a merger and lower prices paid to medical providers," according to Kurk. "Both are unfair to the respective groups and are most definitely not in the public interest. They take away the very choices that a free market provides, and we in New Hampshire value so much."

Arguing for efficiency

Colin Manning, spokesperson for Anthem in New Hampshire, said the merger would enable the combined company to better serve its customers.

"The complementary capabilities of Anthem and Cigna will enable us to continue to lead the transition to value-based care that will reduce costs while improving health outcomes," he said. "Additionally, it will allow for greater efficiency, thereby enhancing our ability to better manage cost drivers that can impact affordability."

But some states aren't buying it, most notably California, whose insurance commissioner last week urged the federal Department of Justice to reject the merger on anti-trust grounds.

California and several other states held public hearings on the merger in March, but New Hampshire is still in the process of obtaining all the information it needs from the insurance companies to form a staff recommendation. That recommendation will be presented at a public hearing, after which Insurance Commissioner Roger A. Sevigny will make his decision.

"The Insurance Department review is entirely separate from the federal review taking place and is on a separate timetable," said Insurance Department spokesperson Danielle Barrick.

Signs of trouble?

Even if the U.S. Department of Justice signs off on the merger, New Hampshire can still object.

"If the (federal) Department of Justice decides not to object, the New Hampshire Insurance Department's hearing would still proceed," said Barrick. "If the DOJ were to object, it's difficult to speculate what would happen, because Anthem would need to determine its next step."

When asked if Anthem has submitted all the information needed for the Insurance Department to schedule its public hearings, Manning could only say, "Our dialogue and information sharing with the New Hampshire Department of Insurance is ongoing and we look forward to continuing the process."

Once the Insurance Department decides it has all the information it needs, and develops a recommendation, it has to provide 15 days advance notice of a public hearing, which means the earliest date for such an event would be in mid-July.

Although the companies initially expected federal approval by mid-year, Cigna acknowledged in a regulatory filing last month that the transaction with Anthem might not be completed in 2016, sending shares of both companies downward. Bloomberg News reported at the time that the delay could be a sign of trouble for the deal.

California matters

California's opposition has only heightened that kind of speculation. Analysts at Wells Fargo lowered the odds of the merger being completed to below 50 percent in the wake of last week's announcement.

At a June 10 meeting in Washington, D.C., DOJ staffers and representatives of more than a dozen states expressed their concerns about the merger, according to a June 19 report in the Washington Post, citing anonymous sources.

Assistant Attorney General David Rienzo, chief of the antitrust division at the New Hampshire Department of Justice, said he could not comment on whether New Hampshire was represented at the June 10 meeting because of the confidential nature of the investigation.

"I can tell you that this is a matter we have been interested in and involved with since it was originally announced," he said. "We are taking part in efforts with other enforcement agencies and other states in reviewing the proposal and trying to make a decision as to where we will end up."

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