N.H. Health Officials Laud Denial of Merger

Valley News Staff Writer
Published: 2/10/2017 12:23:04 AM
Modified: 2/10/2017 12:23:15 AM

West Lebanon — New Hampshire regulators and doctors breathed sighs of relief on Thursday after a U.S. District Court judge blocked the proposed acquisition of Cigna Corp., the nation’s third-largest health insurance company, by Anthem Inc., the second-largest health insurer.

The proposed $48 billion merger would have married two of the three large insurance companies that, according to the state Insurance Department, in 2015 dominated the market for health insurance coverage in New Hampshire: Anthem with a 32 percent market share and Cigna with 25 percent. Harvard Pilgrim, a nonprofit based in Massachusetts, had 24 percent.

New Hampshire Attorney General Joseph Foster, who joined the Obama administration’s Department of Justice and attorneys general from the District of Columbia and 10 other states as a plaintiff in the antitrust action, issued a statement calling the judge’s ruling “a tremendous win for consumers, employers, healthcare providers, and other health insurers who compete in” New Hampshire.

The merger “probably would have been uncompetitive in the state,” and the adverse effect on competition would have been hard to remedy, said James Potter, executive vice president of the New Hampshire Medical Society.

But Anthem Chief Executive Joseph Swedish, in a news release announcing the company’s intention to appeal the judge’s decision, said the merger would have benefited “millions of Americans — saving them more than $2 billion in medical costs annually.”

The judge’s ruling found that the proposed merger would be illegal because it would undermine competition in the sale of insurance to businesses with at least 5,000 employees in at least two of the 14 states where Anthem is the licensee of the national Blue Cross Blue Shield network.

The lawsuit also alleged that allowing Anthem to acquire Cigna would diminish competition in 35 health insurance markets, including the large-group employer market in the New Hampshire portion of the Upper Valley. The judge didn’t decide on that claim other than to note evidence that showed the merger would have hurt competition in one of those markets: Richmond, Va.

In her ruling on Wednesday, U.S. District Judge Amy Berman Jackson said the merger also likely would lead to less competition and diminished innovation.

Berman Jackson was unconvinced by Anthem’s argument that the merged company could save money for customers by combining the two insurers’ different approaches to cost saving. Anthem has negotiated lower payments to doctors and hospitals, while Cigna has higher upfront expenses for wellness in the hopes of reducing future health expenses.

“Eliminating this competition from the marketplace would diminish the opportunity for the firms’ ideas to be tested and refined, when this is just the sort of innovation the antitrust rules are supposed to foster,” she wrote.

Last month, another federal judge rejected Aetna’s roughly $34 billion bid to buy rival Humana, citing in part concerns about competition in hundreds of Medicare advantage markets.

Washington, D.C.-based U.S. District Judge John Bates said in an opinion filed on Jan. 23 that federal regulation would probably be “insufficient to prevent the merged firm from raising prices or reducing benefits.” He added that neither new competitors nor an Aetna plan to sell some of the combined company’s business to another insurer, Molina Healthcare Inc., would be enough to ease competitive concerns.

An Aetna spokesman has said the company is strongly considering an appeal.

The Justice Department had sued last summer to block both deals, and the cases went to trial late last year.

The two deals would have consolidated the nation’s five largest insurers into three, a list that includes UnitedHealth Group Inc., which currently is the largest.

The insurers have argued that by getting bigger they will be able to negotiate better prices with pharmaceutical companies, hospitals and doctor groups that also are growing. They also expect to cut expenses and add more customers, which helps them spread out the cost of investing in technology to manage and improve care.

Industry experts have said any consumer impact from these deals would take years to materialize and could lead to savings in some areas, along with higher costs elsewhere.

The American Medical Association cheered the ruling, saying the merger would have created a health care behemoth too big to regulate and with too much control over consumers’ lives.

“In a David vs. Goliath battle between consumers and mega insurers, a federal judge today ruled that Anthem’s proposed acquisition of Cigna poses a clear and present threat to the quality, accessibility and affordability of health care in the United States,” Dr. Andrew Gurman, the AMA president, said in a statement.

Material from the Associated Press was used in this report.

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