Commissioner Jones supports DOJ block of health plan mergers

Kevin Knauss

8 years ago

California Department of Insurance

U.S. DOJ move to block health insurer mergers consistent with CA commissioner’s recommendation

SACRAMENTO, Calif. – California Insurance Commissioner Dave Jones issued the following statement, following the announcement by the U.S. Department of Justice to block the mergers of major health insurers:

“I’m very pleased with the U.S. Department of Justice action today to block these mergers because they are anti-competitive and would harm consumers and businesses. As insurance commissioner of the largest insurance market in the country, I urged the DOJ to prevent both of these health insurance mergers, which if approved would have resulted in a highly concentrated, less competitive health insurance market doing irreparable harm to consumers and businesses. I applaud California Attorney General Kamala Harris for joining in the DOJ action to block the Anthem merger, which would have reduced competition in California’s already highly concentrated health insurance market-leading to higher costs and lower quality for consumers.

“During the public hearings I convened, I questioned executives from Anthem, Cigna, Aetna and Humana. None of the companies were able to adequately substantiate their claims of savings associated with the mergers. Not one company executive was willing to commit to pass along alleged cost savings to consumers through lower premiums. Bigger is not better when it comes to health insurance mergers. History has shown that health insurance mergers result in higher prices, fewer choices, and lower quality of care.”

Dave Jones, Insurance Commissioner

Insurance Commissioner Dave Jones was the only insurance commissioner in the country to recommend U.S. Department of Justice block both mergers.

Commissioner Jones formally submitted detailed written findings of fact and law to the Department of Justice opposing the mergers of Anthem and Cigna and Aetna with Humana. Jones took this action after holding lengthy public hearings on both mergers. One other insurance commissioner, John Huff of Missouri, opposed the Aetna and Humana merger in his state.

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In a news release, Aetna and Humana defender the merger.

AETNA AND HUMANA TO VIGOROUSLY DEFEND THEIR PENDING TRANSACTION

— COMBINED COMPANY WOULD IMPROVE AFFORDABILITY, QUALITY AND CONSUMER CHOICE —

HARTFORD, Conn. and LOUISVILLE, Ky., July 21, 2016 – Aetna (NYSE: AET) and Humana Inc. (NYSE: HUM) today announced plans to vigorously defend the companies’ pending merger in response to a U.S. Department of Justice (DOJ) lawsuit seeking to block the transaction. A combined company is in the best interest of consumers, particularly seniors seeking affordable, high-quality Medicare Advantage (MA) plans.

The Aetna-Humana transaction offers tremendous value to consumers:

More Medicare options will be available in more regions. Aetna and Humana will be able to expand their offerings to more geographies, creating more options for consumers.
These options will offer greater quality. Aetna and Humana have the greatest number of Medicare Advantage plans rated four stars and higher, and will bring their best practices together.
These options will cost less. By making health care more efficient and effective, Aetna and Humana will eliminate waste and decrease costs for members.
These options will come with new products, tools and services that consumers want – and need. Together, we have the team, talent and technology to develop customized products, tools and services that deliver a better experience.

The facts do not support the basis for DOJ action:

There is robust competition in Medicare. Approximately 70 percent of Medicare beneficiaries elect to participate in traditional Medicare, administered by the government, and that option competes with MA plans administered by companies like Aetna and Humana. Seniors can choose from, or switch between, traditional Medicare and an MA plan every year, or change from one MA plan to another; data show many take advantage of these options. A combined company would serve only 8 percent of total Medicare beneficiaries.
Within MA, there is an abundance of choice for seniors, and built-in protections. In fact, 178 MA organizations offer plans, with 28 new organizations entering MA between 2012 and 2015 alone. Ninety-one percent of Medicare beneficiaries can choose from at least five MA options. Each of these plans faces rigorous government regulation to protect consumers and promote affordability.
To date, regulators in 18 of 20 states where change of control applications are required have approved the transaction, with remaining reviews underway. This is telling, because health care is delivered locally.
Any perceived competition concerns can be addressed through divestitures. Though the companies do not believe divestitures are necessary, significant and well established industry players have already submitted bids for MA assets in certain states that regulators may require to be divested. Such sales would lead to alternative offerings or new entrants in these areas, protecting competition and consumer choice.

A combined company will result in a broader choice of products, access to higher quality and more affordable care, and a better overall experience for consumers. Aetna and Humana look forward to making this clear in court, where a judge will review the transaction based on its merits.

For more information on the competitive dynamics of traditional Medicare and Medicare Advantage, visit http://www.aetnaandhumana.com/wpcontent/uploads/2016/07/Medicare_MA_Competitive-R5-7-16.pdf

For more information on the overall benefits of a combined Aetna-Humana, visit http://www.aetnaandhumana.com/why-were-combining/building-a-healthier-world/.

Anthem Blue Cross news release on DOJ action

Department of Justice decision about acquisition of Cigna

July 21, 2016

Last year, our parent company, Anthem, Inc. and Cigna Corporation announced an agreement under which Anthem will acquire Cigna to accelerate the realization of our vision to be America’s valued health partner. Anthem’s commitment to ensuring that consumers have expanded access to affordable health coverage is the foundation of the proposed transaction and remains Anthem’s top priority.

Anthem made a commitment to keep you informed as we move forward with our Anthem/Cigna integration planning. This week, the Department of Justice (DOJ) took action against Anthem and Cigna in an effort to block the acquisition of Cigna. Anthem intends to fully defend the transaction based upon the procompetitive and consumer-focused benefits and remains willing to work with regulators to resolve concerns in a manner that will allow us to complete the transaction and provide increased access to high quality, affordable care. Anthem remains confident the transaction will close.

Anthem remains committed to delivering on our promises and meeting our customers’ needs both now and in the future. Until the transaction is complete, Anthem and Cigna will continue to operate as separate and independent companies.

While Anthem continues to move forward in this process, we want to share more details on what you can expect now and once our companies join together.

Anthem is taking a careful and deliberate approach to planning for integrating the best aspects of both companies. The combined company will undoubtedly be an industry leader in providing meaningful value to consumers through expanded provider collaboration, enhanced affordability and cost of care management capabilities, and superior innovations that deliver a high quality health care experience for consumers. Anthem remains committed, before and after the acquisition, to ensuring consumers have access to high quality, affordable health coverage.

Anthem’s leadership teams and associates share a visible and deep dedication to innovation, customer service, and member health improvement. These are the true drivers of Anthem’s ability to deliver access to higher quality, affordable care to consumers across a broader geographic footprint. Anthem looks forward to the day we can announce more final details on the acquisition. In the meantime, Anthem will continue to provide you updates in a transparent way. Most importantly, please know Anthem remains committed to delivering on our promises and meeting our customers’ needs, both now and in the future.

Cigna comment on DOJ actions

July 22, 2016

The U.S. Department of Justice (DOJ) has announced its decision to challenge the Cigna-Anthem transaction.

Since we announced the merger and during this transaction review process, our team has continued to operate Cigna as a standalone company with a strong focus on servicing our customers and clients. Our business has remained strong by continuing to invest in innovative solutions to advance the goals of better health, affordability and personalized experience for our clients and customers.

Throughout this process, we remain committed to delivering the same high quality service that you have come to expect from us.

Given the nature of the concerns raised by the DOJ and the overall status of the regulatory process, which under the terms of the merger agreement was led by Anthem, Cigna is currently evaluating its options consistent with its obligations under the agreement.

In the meantime, we will continue to keep you updated on our process and next steps.

Sincerely,

Cigna Individual and Family Plans

Department of Justice news release on action to block health plan mergers

Justice Department and State Attorneys General Sue to Block Anthem’s Acquisition of Cigna, Aetna’s Acquisition of Humana

Lawsuits Challenge Unprecedented Consolidation in the Health Insurance Industry

The U.S. Department of Justice and attorneys general from multiple states and the District of Columbia sued today to block Anthem’s proposed acquisition of Cigna and Aetna’s proposed acquisition of Humana, alleging that the transactions would increase concentration and harm competition across the country, reducing from five to three the number of large, national health insurers in the nation.

The department and state attorneys general filed these two merger challenges in the U.S. District Court for the District of Columbia. The complaints allege that the two mergers – valued at $54 billion and $37 billion – would harm seniors, working families and individuals, employers and doctors and other healthcare providers by limiting price competition, reducing benefits, decreasing incentives to provide innovative wellness programs and lowering the quality of care.

“Competitive insurance markets are essential to providing Americans the affordable and high-quality healthcare they deserve,” said Attorney General Loretta E. Lynch. “These mergers would restrict competition for health insurance products sold in markets across the country and would give tremendous power over the nation’s health insurance industry to just three large companies. Our actions seek to preserve competition that keeps premiums down and drives insurers to collaborate with doctors and hospitals to provide better healthcare for all Americans.”

“We all, including seniors, everyday workers and the previously uninsured and underinsured deserve affordable health insurance options,” said Principal Deputy Associate Attorney General Bill Baer. “Competition today drives these four successful firms to fight to give us affordable options. There is no reason to put that dynamic at risk and that is why we are asking the court to stop these mergers and keep competition working for the benefit of the American consumer.”

“The proposed mergers would eliminate two innovative competitors – Cigna and Humana – at a time when competition has been pressuring insurers to develop new models of care designed to keep Americans healthier, to deliver healthcare more efficiently and to control the costs of providing care,” said Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department’s Antitrust Division. “The department will continue to work with our state colleagues to protect competition and innovation in this vitally important industry.”

Eleven states – California, Colorado, Connecticut, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee and Virginia – and the District of Columbia joined the department’s challenge of Anthem’s $54 billion acquisition of Cigna. Eight states –Delaware, Florida, Georgia, Iowa, Illinois, Ohio, Pennsylvania and Virginia – and the District of Columbia joined the department’s challenge of Aetna’s $37 billion acquisition of Humana.

The suit against Anthem and Cigna alleges that their merger would substantially reduce competition for millions of consumers who receive commercial health insurance coverage from national employers throughout the United States; from large-group employers in at least 35 metropolitan areas, including New York, Los Angeles, San Francisco, Denver and Indianapolis; and from public exchanges created by the Affordable Care Act in St. Louis and Denver. The complaint also alleges that the elimination of Cigna threatens competition among commercial insurers for the purchase of healthcare services from hospitals, physicians and other healthcare providers. The merger would eliminate substantial head-to-head competition in all these markets, and it would remove the independent competitive force of Cigna, which has been a leader in the industry’s transition to value-based care.

The lawsuit against Aetna and Humana alleges that their merger would substantially reduce Medicare Advantage competition in more than 350 counties in 21 states, affecting more than 1.5 million Medicare Advantage customers in those counties. Before seeking to acquire Humana, Aetna had pursued aggressive expansion in Medicare Advantage. Aetna, the nation’s fourth-largest Medicare Advantage insurer by membership, has nearly doubled its Medicare Advantage footprint over the past four years. Humana is the nation’s second-largest Medicare Advantage insurer by membership. The lawsuit also alleges that Aetna’s purchase of Humana would substantially reduce competition to sell commercial health insurance to individuals and families on the public exchanges in 17 counties in Florida, Georgia and Missouri, affecting more than 700,000 people in those counties. The lawsuit alleges that by buying Humana, Aetna would eliminate one of its strongest and most capable competitors in these markets.

Anthem, Inc. is headquartered in Indianapolis, Indiana. It is the nation’s second-largest health insurer and the largest member of the Blue Cross and Blue Shield Association. It holds the Blue Cross license in 14 states and provides health insurance to 39 million people. In 2015, Anthem reported over $79 billion in revenues.

Cigna Corp. is headquartered in Hartford, Connecticut. It is the nation’s fourth-largest health insurer. It operates in every state and the District of Columbia and provides health insurance to 15 million people. In 2015, Cigna reported $38 billion in revenues.

Aetna Inc. is headquartered in Hartford, Connecticut. It is the nation’s third-largest health insurer. It operates in every state and the District of Columbiaand provides health insurance to 23 million people. In 2015, Aetna reported $60 billion in revenues.

Humana Inc. is headquartered in Louisville, Kentucky. It is the nation’s fifth-largest health insurer, operates in every state and the District of Columbia and provides health insurance to 14 million people. In 2015, Humana reported $54 billion in revenues.