AMA says Anthem-Cigna deal would shrink insurer choices in CT

Washington – The American Medical Association, strongly opposed to the merger of Anthem and Cigna, said in a report Wednesday that the deal would greatly limit competition for private health insurance in Connecticut and nine other states, leading to premium increases and fewer choices of doctors and hospitals for the state’s patients.

In another four states, Ohio, New York, California and Wisconsin, the impact of the proposed merger, which has been opposed by the Justice Department, would have a lesser impact but still “poses significant competitiveness concerns,” the AMA said.

The AMA report also said a proposed merger between Aetna and Humana would reduce competition in local commercial health insurance markets in a number of states, but Connecticut was not one of them.

The AMA has been strongly opposed to the mergers, saying further consolidation in the health insurance industry would lead to “the exercise of market power and, in turn, harm to consumers and providers of care. “

“Conceptually, mergers and acquisitions can have beneficial and harmful effects on consumers,” the AMA’s report said. “However, only the latter has been observed. It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power – the ability to raise and maintain premiums above competitive levels – instead of passing any benefits obtained through to consumers.”

Anthem dismissed the AMA report saying it “merely reiterates the comments the AMA has made previously and does not reflect the actual facts regarding Anthem’s acquisition of Cigna.”

“Together, Anthem and Cigna, who have limited overlap in a highly competitive industry, will be in a better position to improve consumer choice and quality,” said Anthem spokeswoman Sarah Yeager. “Most of all, we will be better able to lead the transition to value-based care that will reduce costs while improving health outcomes.”

Yeager said the merger with Cigna will result in efficiencies that would reduce the insurers’ costs, “enhancing our ability to manage the cost drivers that negatively impact affordability for consumers.” But the companies have not committed to pass along those cost savings to consumers, the Justice Department says.

The AMA issues competitiveness reports periodically. Its latest report is based on health insurance enrollment in 2014 and includes, for the first time, information on enrollment in state health insurance exchanges created by the Affordable Care Act.

To gauge market concentration, the AMA uses the Herfindahl-Hirschman Index, or HHI, a commonly accepted measure.

An area with an HHI less than 1,500 is “unconcentrated” and mergers are unlikely to raise competitive concerns. Areas with an HHI between 1,500 and 2,500 are “moderately concentrated,” and those with HHI’s greater than 2,500 are ‘’highly concentrated” and raise significant competitiveness concerns.

The AMA says Connecticut has an HHI of 2,493. The merger between Anthem, which sells policies under the WellPoint brand, and Cigna would raise the state’s HHI to 3,788, an increase of 1,295 points, the AMA says.

The AMA says WellPoint (Anthem)  currently has 39 percent of the commercial market share in the state, and Aetna has 20 percent.

The Norwich-New London-Westerly, R.I., metropolitan statistical area has the fewest health insurance choices for consumers, the AMA says. In that area, WellPoint has 49 percent of the market and United HealthCare has 22 percent.

The AMA analysis says the two mergers would collectively impact local commercial health insurance markets across 23 states besides Connecticut, including: Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Mississippi, Missouri, Nevada, New Hampshire, New York, Ohio, Tennessee, Texas, Utah, Virginia, West Virginia and Wisconsin.

The Justice Department, which has sued to block both mergers, agrees with the AMA that they would result in less competition and higher premiums. The insurers are challenging the DOJ’s lawsuit.

Connecticut Attorney General George Jepsen also agrees with the AMA that the Anthem-Cigna deal would harm consumers in the state and has joined the DOJ’s lawsuit against that merger. But Jepsen has not opposed the Aetna-Humana merger, saying Humana does not have a large presence in the state.

U.S. Circuit Court for the District of Columbia Judge Amy Jackson has set a trial date of Nov. 21 for the Anthem-Cigna merger and said she will render a decision in early January.

U.S. District Judge John D. Bates will hear the Aetna-Humana case. He has set a trial date of Dec. 5 and said he expects a ruling around mid-January.