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California Insurance commissioner urges DOJ to block Anthem/Cigna merger



June 17, 2016
Area(s) of Interest: Commercial Payors 

California Insurance Commissioner Dave Jones urged the U.S. Department of Justice (DOJ) to block the merger deal between insurance giants Anthem and Cigna. After an extensive review of the Anthem and Cigna merger, Commissioner Jones issued detailed findings that the merger of the second and fourth largest national health insurers is anti-competitive and will harm California consumers, businesses and the California health insurance market.


Jones found that if the merger moves forward, Anthem's market share will exceed 50 percent in 28 California counties, and 40 percent in 38 counties, which would negatively impact California consumers with likely reductions in access, quality of care and affordability of health insurance.


"When it comes to the Anthem and Cigna merger, bigger is not better for California's consumers or the health insurance market," Jones said.


Jones held a public hearing on March 29, where the California Medical Association (CMA), members of the public, Anthem and Cigna executives, consumer advocates, medical professionals, and merger experts provided testimony regarding the merger’s potential impacts.


Just before the public hearing, CMA conducted a survey of California physicians to see how they would be impacted by the proposed merger. An overwhelming 85 percent of physicians oppose the Anthem-Cigna merger, according to the CMA survey. Of 989 physicians surveyed from practices in California, the majority expressed that the health insurer union could narrow physician networks (82 percent), force physicians to provide fewer services (90 percent) and pressure physicians into refraining from aggressive patient advocacy (75 percent).


Additionally, a growing body of peer-reviewed literature demonstrates that greater consolidation among health insurance companies leads to increased health insurance costs.


“Surrendering market power to one corporation does not bode well for California’s patients,” said CMA President Steven E. Larson, M.D., MPH. “Without competition, the health insurance companies will run unchecked. For the sake of those who desperately need medical care, we must not let this happen.”


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 companies, 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 insurance companies demonstrate that they put profits before patients.


The CMA survey was conducted in collaboration with the American Medical Association and spanned across 47 California counties. Respondents represented a variety of specialties and practice sizes. To see the full CMA survey, click here.


To read the insurance commissioner's letter to the DOJ, click here.

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