April 28, 2017
Area(s) of Interest: Commercial Payors Payor Issues and Reimbursement
A federal appeals court on Friday upheld a lower court’s decision to block the $48 million mega-merger between Anthem and Cigna. The ruling favored the U.S. Department of Justice and 11 states, including California, who argued that the Anthem-Cigna merger would limit price competition and lower the quality of health care.
“CMA applauds the court’s decision to protect health care access, quality and affordability by blocking Anthem and Cigna’s attempt at further enlarging its already vast market power,” said CMA Senior Vice President and General Counsel Francisco Silva. “CMA has opposed an Anthem-Cigna merger since day one and we are proud of the role that California has played in this decision. 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.”
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 further diminish 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).
Barring an appeal to the U.S. Supreme Court, today’s federal appeals court ruling would represent the final blow the Anthem and Cigna’s proposed merger.