May 16, 2017
Area(s) of Interest: Commercial Payors Payor Contracting Payor Issues and Reimbursement
The mega-merger of health insurance giants Anthem and Cigna was dealt a final blow when a federal court in Delaware denied Anthem’s request for a temporary restraining order to stop Cigna from walking away from the deal. Following the ruling, Anthem announced it was officially terminating its $54 billion agreement with Cigna.
“CMA has opposed an Anthem-Cigna merger since day one and we are proud of the role that California has played in this decision," said California Medical Association (CMA) Senior Vice President and General Counsel Francisco Silva. "This merger would have allowed the merged company to use its massive market power to further limit patients' access to care by creating narrow physician networks and increasing health care costs and patient premiums.”
The termination of the proposed merger concludes a successful campaign by CMA, the American Medical Association and 16 other state medical societies – on behalf of patients and physicians – to stop the Anthem-Cigna merger.
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.
Seventy-one percent of the nation’s metropolitan areas already lack competitive commercial health insurance markets. A merger between Anthem-Cigna would have further diminished competition in 121 metro areas throughout the 14 states where Anthem is licensed to provide commercial coverage.
Health insurer consolidation also compromises the ability of physicians to advocate for their patients. In practice, market power allows insurers to exert control over clinical decisions, which undermines the patient-physician relationship and eliminates crucial patient care safeguards. Competition among health insurers, on the other hand, can lower premiums, enhance customer service and spur innovative ways to improve quality while lowering costs. Patients benefit when they can choose from an array of insurers who compete for their business by offering desirable coverage at competitive prices.
In March 2016, a CMA-backed survey of California physicians revealed an overwhelming 85 percent opposed the Anthem-Cigna merger. Out of the 989 physicians surveyed from practices across the state, 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).
“The termination of the Anthem-Cigna merger is a clear victory to preserve competition in the health insurance industry,” said AMA President Andrew W. Gurman. "Competition, not consolidation, is the right prescription for health insurance markets."