Saying that a merger between health insurers Anthem and Cigna would be anticompetitive and hurt consumers, California Insurance Commissioner Dave Jones urged the U.S. Department of Justice on Thursday to block the proposed deal. The call came after what a press release described as an “extensive” review of the potential deal that has an estimated worth of $50 billion and amid growing concern across the country on the issue.
The move by California further clouds the prospect of a proposed merger that is already embroiled in controversy. On the same day California regulators announced their move, officials in Connecticut — which is leading states’ merger review — voted to launch an ethics inquiry into that state’s insurance commissioner over her ties to Cigna. That vote followed an International Business Times investigation documenting those ties, as well as campaign money from Cigna and Anthem to Connecticut Gov. Dan Malloy’s political groups.
For California, the merger’s effects would be acute: According to Jones’ office, should the merger be approved, the new company would control more than 50 percent of the market in 28 of the state’s counties and over 40 percent of the market in 38 counties. The merger would increase concentration in a health care market that is already highly consolidated.
“When it comes to the Anthem and Cigna merger, bigger is not better for California's consumers or the health insurance market,” Jones said in a press release announcing his office’s push to have federal regulators block the transaction.
In a company statement emailed to IBT, Anthem said: "We do not believe that the California Department of Insurance’s opinion is based on the true merits of this transaction. We are confident 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."
In a public hearing in March, Jones pressed Anthem and Cigna executives on the issue. While the healthcare officials said that a merger would bring $2 billion in savings through more efficient services, a statement from the California Department of Insurance urging the Department of Justice to block the deal said that, when asked to provide proof of those savings, Anthem officials “provided only vague, speculative, and impossible-to-verify assertions.” The companies declined to promise that they would pass savings onto consumers by lowering prices.
“Anthem and Cigna failed to provide details to support their claim of $2 billion in savings and they refused to guarantee consumers and businesses will see the benefit of any potential savings in reduced prices," Jones said. "The Anthem and Cigna merger reduces competition in a market that is already dominated by just four health insurers. It will likely result in reducing consumers' choices, increased prices, and lower quality care.”
The companies have spent millions in their efforts to persuade federal regulators in the Department of Justice to approve their plans. An IBT review of lobbying records showed that the two companies spent more than $13.6 million in 2015 alone on the effort and hired 53 lobbyists to represent them.
This story was updated at 3:05 p.m. EDT to include a new statement from Anthem in response to California's move.