April 25, 2016

On April 22nd, 2016, a coalition of consumer groups and unions composed of AFSCME, Consumer Action, Consumers Union, Consumer Watchdog, Consumer Federation of America, and Citizens Action Coalition filed comments to Indiana Insurance Commissioner Stephen Robertson regarding the proposed merger of Anthem-Cigna. The purpose of these comments was to raise concerns about the merger and its impact on healthcare in Indiana and to commend the Department for holding a public hearing to evaluate the merger. Here are a number of specific points raised:

• Under current law, the Indiana Department of Insurance (IDOI) shall approve a merger only if a preponderance of the evidence shows that it will not substantially lessen competition or tend to create a monopoly. This acquisition will have a substantial harmful impact on Indiana consumers and health insurance markets.

• The merger will put an end to what could be significant existing and future competition between Anthem and Cigna in the Medicare Advantage (MA) market. In Indiana, a combined Anthem-Cigna company would possess 15% of the MA market share. These shares are significant enough to warrant study into whether the merger will substantially lessen competition. Studies have found that where Aetna and Humana compete, annual premiums are lower by up to $302 for Aetna and by $42 for Humana.

• The merger will reduce competition in various markets. A combination of Anthem and Cigna would result in an entity with 51.9% Indiana market share in the fully insured employer group market, and 59% Indiana market share in the self-insured employer group market. These market shares exceed levels that have led to past Justice Department actions against proposed health insurance mergers. Under Indiana law, the merging parties have the burden of showing that their merger is not anticompetitive.

• The merger will lead to higher health care costs and insurance premiums. Indiana’s rates are already higher than those in most other states. Studies have shown that when health insurers merge, there is almost always an increase in premiums. Current market regulations will not deter an insurer from raising costs.

• Proponents of the merger claim that this deal will lead to substantial efficiencies and innovation. However they have offered little detail about these supposed savings, and there is no evidence or scholarly study showing that such benefits from this acquisition will reach consumers.

• The Blue Cross Blue Shield Association places a number of rules and guidelines on its individual insurers. In order to be in compliance with those rules, if Anthem acquires Cigna, Anthem would be forced to limit Cigna’s health insurance business in Indiana, or even pull out of the state. The two insurance companies should be questioned on these rules and how they pertain to the merger.

• Divestitures are a practical remedy for health insurance mergers; they are ineffective and usually fail to restore competition. However, IDOI can develop additional remedies to protect consumers, such as requiring rate control or premium stability, requiring that plan benefits and options be maintained, improving access to providers, or other regulatory steps.

To see the full comments submitted to Commissioner Robertson please click here.

To see the comments submitted by the Indiana State Medical Association to Commissioner Robertson please click here. 

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The Indiana Department of Insurance approved the Anthem-Cigna merger on May 25th, 2016.