Citing an already concentrated state insurance market, California’s insurance commissioner urged the Department of Justice to block the Anthem-Cigna merger arguing that it would reduce competition and quality care, according to a release from the California Department of Insurance.
In a letter to the DOJ, Insurance Commissioner Dave Jones said Anthem’s “enhanced market power” would lead to higher premiums across the state and lower quality care for California residents, echoing similar concerns raised by the American Hospital Association. Jones also cites public hearing exchanges in which Anthem executives could not describe in detail an estimated $2 billion in “efficiencies and synergies” that would emerge as a result of the merger, and offered no concrete evidence that prices would not increase.
“By blocking the merger we retain the important possibility that Anthem and Cigna will compete between themselves and with other insurers for members based on the size and quality of their networks and the providers in those networks, as well as on price,” Jones writes. “By allowing the merger, we lose any hope of such competition.”
In a statement to Reuters, Anthem disagreed with Jones’s assessment and expressed confidence that the “highly complementary nature and limited overlap of our organizations that will benefit the complex and competitive health insurance markets will be reviewed on the facts by the DOJ and appropriate state authorities.”
Recent reports indicate that the pending Aetna-Humana and Anthem-Cigna mergers are both facing an uphill battle for DOJ approval given the agency’s tendency to scrap mergers in other industries over anti-trust concerns. Last month, reports of discord between Anthem and Cigna called into question the future of the merger, particularly as analysts have soured on likelihood of DOJ approval.
For more:
- here’s the California Department of Insurance release
- read the letter from Insurance Commissioner Dave Jones