Anthem-Cigna deal could harm local markets, witnesses say

With no decision in the first phase of the antitrust trial against the proposed merger between Anthem and Cigna, the second phase kicked off with expert witnesses offering their take on how the deal would affect local markets.

David Dranove, a Northwestern University healthcare economics professor and a witness for the Justice Department, testified Tuesday that a number of states and cities would likely see higher prices and poorer care as a result of fewer insurance choices, according to an article from the Hartford Courant. Though Anthem has argued that smaller, regional payers would provide enough competition to keep prices low, Dranove said that is unlikely, according to the article.

“If you have a highly concentrated market and you have a merger, you go from bad to worse,” he said.

Late last week, another DOJ witness, Frank Gorse, vice president at urgent care firm Patient First, testified that the Anthem-Cigna merger could “squeeze” providers with lower payouts from Anthem, an outcome that would negatively impact patient services, Bloomberg reports. Anthem’s rates already fall below inflationary cost increases for Patient First, Gorse said, and the merger could drive Cigna’s below that threshold as well—which would lead the provider to cut services.

The first phase of the Anthem-Cigna trial, which wrapped up last week, concerned how the deal would affect national employer-based insurance accounts. During that phase, testimony from lawyers and executives shed further light on divisions between the two companies. Aetna and Humana are also defending their proposed merger in a trial in federal court.

Testifying on behalf of Aetna last week, Jonathan Orszag, economist and principal of Chicago consulting firm Compass Lexecon, dismissed concerns that the merger would hinder competition, according to the Courant. Humana, Orszag said, focuses on Medicare Advantage plans, while Aetna focuses more on commercial group insurance. He also noted that seniors have the option of traditional Medicare, so they would not see a united Aetna-Humana dominate their market