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Anthem-Cigna Health Care Megamerger Under Scrutiny

SAN FRANCISCO CHRONICLE
http://www.sfgate.com/business/article/Anthem-Cigna-health-care-megamerger-under-scrutiny-7213696.php

Anthem Inc.’s proposed $54 billion acquisition of Cigna Corp., which would create the country’s largest health insurer, faces scrutiny Tuesday as state regulators hold a public hearing in San Francisco to address concerns about the megamerger.

The hearing comes a week after state regulators approved the merger of HealthNet and Missouri’s Centene Corp. That significantly smaller, $7 billion deal went largely unopposed.

The same can’t be said of the Anthem-Cigna acquisition, which would create a company with $115 billion in annual revenues and insure 53 million members. Critics argue the merger would reduce competition, increase rates and make it harder for patients to find doctors.

“Anthem, which is already a behemoth, would leapfrog Kaiser in California and United nationwide to be the biggest insurance company in California and the country,” said Carmen Balber, executive director of the Consumer Watchdog advocacy group. Her organization didn’t oppose the HealthNet-Centene merger but wants state regulators to reject the deal between Connecticut’s Cigna and Anthem, an Indianapolis company that operates as Anthem Blue Cross in California.

The health insurance industry is undergoing a surge of consolidation, including the planned merger of Aetna and Humana, which the California Department of Insurance plans to review in hearings next month.

While the federal Affordable Care Act has helped reduce the number of uninsured Americans, some observers say it’s also spurred merger activity.

“The health insurance marketplace is doing extraordinarily well after the passage of the Affordable Care Act,” Balber said. “They have guaranteed markets and profits are incredibly strong, which has put them in position … to gobble up all the smaller companies in the market.”

If the merger is approved, Anthem would grow from 39 million members nationwide to more than 53 million, surpassing the nearly 46 million members of UnitedHealth Group. In California, Anthem-Cigna’s enrollment of 8.2 million would top Kaiser’s more than 7 million members.

Anthem, for its part, described expanding access to affordable health coverage as the company’s top priority and “the foundation of our combination with Cigna.”

“Anthem and Cigna have limited overlap in a highly competitive industry and together will be in a better position to improve consumer choice and quality,” said Darrel Ng, spokesman for Anthem Blue Cross. “Additionally, we will be better able to manage the cost drivers that negatively impact affordability for consumers.”

Officials from the state Department of Insurance declined to discuss the Anthem-Cigna merger in advance of the hearing. But they did say the proposal is different from the HealthNet-Centene deal, which they contend could actually strengthen competition within California.

Janice Rocco, the insurance department’s deputy commissioner, noted that the marketplaces of HealthNet, which is from Woodland Hills (Los Angeles County), and Centene don’t overlap.

“With the HealthNet-Centene merger, capital is invested into HealthNet that might make them a stronger competitor with Kaiser, Anthem, Blue Cross and Blue Shield,” Rocco said.

 

Victoria Colliver is a San Francisco Chronicle staff writer. Email: vcolliver@sfchronicle.com Twitter: @vcolliver

 

Anthem-Cigna merger hearing

Here are details about the California Department of Insurance’s public hearing to discuss the proposed acquisition of Cigna by Anthem, which would create the country’s largest health insurer:

When: Tuesday, 1 p.m.

Where: California Department of Insurance, 45 Fremont St., 22nd floor hearing room, San Francisco

The hearing will be live-streamed on the department’s website at https://www.insurance.ca.gov. Those who cannot attend can send comments by Friday to the department at Kayte.Fisher@insurance.ca.gov.