Anthem-Cigna Merger Proposal Takes A Grilling -AND- California physicians oppose health plan mega-mergers, citing reduced access to affordable high-quality health care

Tue Apr 12 18:56:24 PDT 2016

March 30, 2016

Anthem-Cigna Merger Proposal Takes A Grilling

<http://californiahealthline.org/news/anthem-cigna-merger-proposal-takes-a-g
rilling/?utm_campaign=CHL%3A+Daily+Edition&utm_source=hs_email&utm_medium=em
ail&utm_content=27849839&_hsenc=p2ANqtz--edBS_BVFc6AL6EQ1T7PIee0DdWPcK20sqox
1owwkb54l90qQf3v0GKvWoEgnrU1go-iiayN6K1qA_ToqCF7q97kzdXwppBHmUfIs6PxhsitAXBN
M&_hsmi=27849839> California Healthline

By Ana B. Ibarra

SAN FRANCISCO - State insurance commissioner Dave Jones continued to make
his skepticism clear regarding Anthem Inc.'s proposed $54.2 billion
acquisition of Cigna Corp. during a hearing here on Tuesday.

Company executives faced Jones and a panel of physicians and consumer
advocates who questioned the benefits the companies say the acquisition will
bring.

The Department of Insurance hearing took a more pressing tone than a related
hearing held by the Department of Managed Health Care earlier this month.

According to Anthem and Cigna, the merger will result in easier access to
medical providers for patients and lead to more affordable health insurance
policies.

Jay Wagner, Anthem's vice president and counsel, and Tom Richards, Cigna's
global leader for strategy and business development, said the purchase would
cut costs by $2 billion annually.

They told Jones they were "quite confident" in that estimate. But Wagner and
Richards said they could not commit to guaranteeing savings for consumers
because of factors out of their control, such as the rising prices of
specialty drugs.

Brent Fulton, a professor of health economics and policy at UC Berkeley,
presented an analysis on the Anthem and Cigna merger at the request of the
Department of Insurance.

Theoretically, Fulton said, consolidation could lead to stronger negotiating
leverage with hospitals, physician organizations and other providers of
health care services that now hold market power, resulting in lower costs
for health insurance customers.

"However, we are not aware of any peer-reviewed studies that have found that
higher insurer market concentration has led to lower health insurance
premiums," Fulton said.

Consumer advocates said the acquisition would make existing problems with
health insurance worse. Anthem, they claimed, has already struggled with
inaccuracies in provider directories, low quality ratings and poor
management of grievances.

"We don't have any proof from Anthem on concrete benefits to consumers,"
said Carmen Balber, executive director of Consumer Watchdog.

"Consumers are already hurting in cost," she said, stating that about 20
percent of consumers can't afford the prices even with insurance.

Anthem is part of the four insurance titans that dominate the health
insurance market in California, along with Kaiser Permanente, Blue Shield
and Health Net. If approved, the Anthem and Cigna merger would result in the
largest insurer by enrollment in the state, with an approximate 8.2 million
policyholders, surpassing current leader Kaiser. (Cigna now is in fifth
place.)

Even without the merger, the top four insurance companies control more than
80 percent of the market.  The Anthem-Cigna union is one of two pending
mergers still under review by state regulators.

Last week, Centene's $7 billion purchase of Health Net was approved.
Regulators are also examining the planned $37 billion combination of Aetna
Inc. and Humana Inc.

The Anthem-Cigna merger also needs the green light from 23 other states.
Nationally, the combination  would cover some 53 million policyholders,
overtaking UnitedHealth Group Inc., which has close to 46 million members,
according to 2013 estimates.

The Department of Managed Health Care, which held a hearing on this same
merger earlier this month, is expected to impose certain conditions on the
Anthem-Cigna deal to address consumer worries about the potential impact of
large-scale consolidation. Those conditions are not yet clear.

Jones said he's asked the two companies for more information and he expects
to make a recommendation in the coming week.

"I am considering what is best for consumers and the overall marketplace,"
Jones said in a prepared statement. "Anthem and Cigna bear the burden of
demonstrating this proposed merger is in the best interest of the California
consumers and health care marketplace."

Jones said he plans to make a recommendation to the Federal Trade Commission
and Department of Justice, who ultimately have the final say on the merger
nationwide.

March 28, 2016

California physicians oppose health plan mega-mergers, citing reduced access
to affordable high-quality health care

<http://www.cmanet.org/news/press-detail/?article=california-physicians-oppo
se-health-plan-mega> California Medical Association

SACRAMENTO - Eighty-five percent of California's physicians are opposed to
the merger of health insurance giants Anthem and Cigna, according to a new
analysis released by the California Medical Association (CMA) on Monday.

The CMA survey, conducted in collaboration with the American Medical
Association (AMA), sought to gauge California physicians' perspective on the
proposed Anthem-Cigna and Aetna-Humana mergers, as well as gather insight
into the tactics undertaken by insurance companies' in their negotiations
with physicians.

"California's doctors could not be more clear: these mergers are bad for
patients and bad for medicine," said CMA President Steven E. Larson, M.D.
"These two mergers would give insurance companies near monopsony at the
expense of patients' access to providers and physicians' ability to provide
fundamental care. In the end, patients will suffer."

The survey results were released on the eve of a California Department of
Insurance hearing on the implications of the proposed Anthem-Cigna merger.
Both CMA and AMA will be testifying in opposition to the merger at the
hearing.

Concerns over consequences of this type of market consolidation included
narrower physician networks that make it more difficult for patients to find
care from in-network physicians (82.2%), reduced ability for physicians to
advocate on behalf of their patients (81.9%), and a reduction in the
quantity or quality of services that physicians can offer their patients
(88.8%). Physicians expressed similar concerns over the Aetna-Humana merger.

"If these mergers go through, the impact on everyday people trying to
receive medical care in a timely and affordable manner would be
devastating," said CMA General Counsel and Senior Vice President Francisco
Silva. "The result would be less competition with only the health insurers
coming out winners."

CMA has long been concerned with the consolidation of health plans and
health insurers and the reduction of competition. When market power is
consolidated among just a few plans, insurers contract with fewer
physicians, limiting choice for patients, increasing wait times for
referrals, and sometimes forcing them to pay more to see out-of-network
doctors. Physicians across the country worry that the hardball tactics
undertaken by these plans demonstrate that they put profits before patients.

The survey gathered data from 989 practices in 47 California counties,
representing physicians from a range of specialties and practice sizes.

Jeff Wells
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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