Four days before California’s public hearing about Anthem’s proposed acquisition of Cigna, state regulators sent the corporate giants what seemed like a routine request: Could the companies provide their board resolutions and financial projections about the merger?

The firms responded to the California Department of Insurance the next day — with a protest and a series of demands.

“Both Anthem and Cigna are very concerned about negative consequences from providing additional confidential information to CDI. We've already provided substantial information,” wrote Anthem’s outside counsel in an email obtained by International Business Times. He then said the companies would turn over the material, but only if regulators guaranteed that they would block any open records requests for it, and not divulge any of the information during an upcoming hearing.

The regulators agreed.

Less than four months later, the episode underscores one of the key complaints of those opposing the Cigna-Anthem merger and a separate Aetna-Humana merger — which, if approved, would create two of the largest health insurance conglomerates in American history. Groups representing consumers, hospitals and physicians say that beyond their specific criticism of the deals, the regulatory review process has been far too secretive, to the point of preventing public input and scrutiny.

As the health insurers pour money into lobbying and into campaign contributions that flow to state officials, merger critics say a lack of transparency prevents the public from being able to see whether the review process is genuinely impartial — and whether the deals would benefit not just company shareholders, but the public at large.

The Cigna-Anthem merger, for instance, would create a behemoth with an estimated 53 million customers. The companies say that would result in cost-saving efficiencies. Groups opposing the deals say the secrecy surrounding the regulatory review makes it difficult to know if regulators are evaluating whether such savings would be passed on to consumers or be pocketed by the companies as profit. That’s a particular concern, they say, with company executives positioned to potentially make millions off the transactions.

“Many decisions are being made in secret, with no public input, even in states where there is anti-competitive overlap,” said a letter to the Justice Department released this week from 43 consumer and physicians groups from across the country.

In some states where there haven't been hearings, regulators say the law does not mandate a public review of a merger if the insurer is not domiciled there. They also assert that in rejecting open records requests, they are merely following freedom of information laws, which typically give them broad powers to block the release of documents that contain companies’ trade secrets.

For its part, Anthem said officials have an obligation to protect their proprietary information during the review process.

“It is an appropriate and customary practice to request that competitively sensitive and material nonpublic information that is provided to regulators be kept confidential,” said Anthem spokesperson Leslie Porras in a statement emailed to IBT. “It would be inappropriate for regulators in connection with their review process to release a company's proprietary and confidential information into the public domain.”

The review process itself is inherently opaque. Even tracking the progress of regulatory proceedings — and accessing information about the potential effects of the mergers — is no simple task because there is no official list of all the states charged with reviewing the deals. On top of that, some regulators have been approving the mergers without even a single public hearing — and in some instances have not even disclosed their approval orders until months later. Given that information vacuum, it's not surprising that many consumers are in the dark. Polls from two states that will be affected by the deal — Connecticut and Colorado — show that the vast majority of people do not even know the mergers are taking place.

Public hearings “have been few and far between,” said the groups’ letter.

An IBT survey of the more than two dozen states that could review the Cigna-Anthem merger found that just 10 states have held public hearings. Of those, one has moved to try to block the merger — though that state, California, cannot take action on its own: its state law only empowers it to urge the Justice Department to halt the deal. Three states that held hearings have not yet issued a ruling, while the other six states have approved the transaction.

A full 15 states have not held a hearing about the proposed transaction, which was first announced in 2015. That includes Connecticut, where former Cigna lobbyist Katharine Wade heads the insurance department that is leading the national multistate review of the merger. (Wade's office has said that though the state has not scheduled a hearing yet, the insurance department will hold one.  Documents obtained by IBT show Connecticut regulators have repeatedly met with officials and lobbyists for Cigna and Anthem.)

Out of the 15 states that have not held a hearing, six — Kentucky, Maryland, Nevada, North Carolina, South Carolina and Wisconsin — have approved the merger with no hearing.

In the review of Aetna’s proposed merger with Humana, the companies say 17 out of 20 states have already approved the merger. Some of those approvals came with little fanfare.

In Ohio, Democratic lawmakers asked for a public hearing about the transaction. The state’s insurance regulators, however, approved it in May without such a hearing — and consumer groups say they learned of the approval only in June. Connecticut approved the Aetna-Humana deal in January, but held no hearing — and didn't disclose the approval until May, four months after the fact.

States typically allow public officials to exempt commercially sensitive information and trade secrets from open records laws. In the case of the mergers, the groups opposing the transactions assert that the exemptions are being applied so broadly that they prevent the release of inherently public information. Their letter says open records requests for information about the mergers “have been met in multiple states by stonewalling and obfuscation.”

Physicians groups in two states have seen regulators block their request for Aetna’s so-called Form E, which outlines how the merger will affect competition.

When the Colorado Medical Society requested the documents, the state’s department of insurance went to court to block their release. In April, a judge sided with the agency.

In Connecticut, after learning in May that its insurance department had approved the Aetna-Humana deal with no hearing, the Connecticut State Medical Society asked its insurance regulators for the same document.  

“Given the secrecy with which CID made the determination, it is impossible to know whether even a shred of evidence was presented to suggest that the merger would result in improved health coverage, job retention, or any other positive result for Connecticut residents,” the group said. The department provided some material, but did not release Form E, asserting that it “is confidential and exempt from disclosure.”

Meanwhile, in the Cigna-Anthem merger, Connecticut regulators initially released some email correspondence between company officials and regulators. But after those documents generated controversy about Wade’s ties to Cigna, the agency responded to a subsequent request for additional material by saying that “any documents received from Anthem or CIGNA and related to the proposed merger are confidential.” At the same time, the office of Connecticut Attorney General George Jepsen — whose wife worked at Cigna — blocked the release of any of its correspondence about the merger.

In the last few months, officials in Indiana, Tennessee and Virginia have issued blanket denials of open records requests for information about the Cigna-Anthem transaction.

In deliberations about what to release and what to keep confidential, insurance companies have not been bystanders.

Insurers in California made secrecy an explicit condition of their cooperation with the regulators. Emails show that state regulators asked Cigna and Anthem to provide financial projections and their board resolutions about the merger. One of the companies’ lawyers expressed concern about the request, and said “we will provide the additional information that you requested when you provide the following assurance.” The list of demands included guarantees that:

  •  “The Information will be treated as confidential...CDI will store It In an electronic file separate from the public information that we've provided and access to the confidential Information will be restricted to the minimum number of staff who need to access It.”
  •  “None of the confidential Information will be the basis for any questions posed to Anthem or Cigna in or during any public forum.”
  •  “CDI will deny any request for the information made pursuant to the Public Records Act or any basis.”
  •  “If an action is filed against CDI to compel the disclosure, CDI will both oppose strongly its disclosure and will notify Anthem and Clgna immediately upon CDI’s learning about an action to compel disclosure so those entities can intervene to protect their information.”
  • “Neither Anthem nor Cigna will be burdened with any further request to produce information to CDI relating to this merger.”

The insurance regulators agreed to most of the demands. In an email response to the company lawyer, a California insurance department official said: “We are willing to keep confidential documents confidential. And as such we will in the regular course abide by your other requests to keep them separate and to refrain from producing them In the event of a Public Records request. We cannot promise that we may not ask for additional relevant information.” They added that “we agree not to divulge, through direct reference during questioning, any specific confidential information.”

In Connecticut, the insurance industry pushed confidentiality legislation in the 2016 state session. Ultimately, the legislation — championed by Wade — was passed in the middle of the night and signed by Connecticut Gov. Dannel Malloy. The new law will further empower regulators to exempt insurance industry data from the state’s open records law -- a move that critics say could make it harder in the future for the public to understand the effects of the mergers, should they be approved.

Connecticut Comptroller Kevin Lembo, a Democrat, said the combination of Wade’s ties to Cigna and a lack of transparency was eroding the public’s overall confidence and called into question whether the government’s merger review process has been truly objective.

“At present, I do not believe the current review process will ensure an unbiased decision based on the facts,” he wrote in a letter last week to the insurance department. “The strong ties between you as the regulatory authority and one of the merger applicants, combined with the secretive nature of the proceedings, at the very least, create the appearance of a favored outcome.”