Despite growing speculation about the regulatory hurdles that the two major health insurance mergers will face, Cigna CEO David Cordani tells CNBC that there are several reasons his company and Anthem are confident their deal will win approval.
"The key to our transaction is the two companies are actually quite complementary, so in general we operate in different businesses," Cordani (pictured right) says during an interview with the news network. For example, about $20 billion, or more than half of Cigna's revenue, comes from businesses that Anthem is not in, he says, adding that both insurers are focused on working with providers to keep costs down.
That said, Cigna and Anthem know that they are in for a thorough evaluation from regulators that is likely to last 12-18 months, Cordani says. Federal regulators are likely to consider the effects of the Anthem-Cigna merger and Aetna-Humana combination together, and state insurance commissioners will also scrutinize the deals, FierceHealthPayer has reported.
"We will fully engage with state leaders and federal leaders--we're used to dealing in a transparent environment and those conversations have already started," he says. The companies hope to demonstrate that their consolidation will help accelerate the shift from volume-based to value-based reimbursement and "that in many cases more choice will be brought to market," Cordani adds.
The combined company may also sport increased ability to push back against high pharmaceutical prices, an effort many insurers have undertaken as drug costs skyrocket. Anthem and Cigna have already expressed interest in exploring a combined pharmacy benefit management venture. Cigna also currently embraces value-based contracts with drugmakers, Cordani says.
"The future is not fighting over the discount or the cost per unit alone--the future is aligning the incentives, because everybody wants to improve the quality or the health outcome, and we want to pay for the outcome that generates the positive result."
To learn more:
- watch the interview
All eyes on how regulators will respond to massive health insurer mergers
Anthem, Cigna see pharmacy benefit management opportunities in merger
Aetna-Humana deal will face scrutiny from state authorities
Anthem to acquire Cigna in $54.2 billion deal