Reactions to Anthem/Cigna Merger

Anthem and Cigna have entered into a definitive agreement whereby Anthem will acquire all outstanding shares of Cigna in a cash and stock transaction. The Anthem board of directors will be expanded to 14 members. David Cordani and four independent directors from Cigna’s current board of directors will join the nine

Joseph Swedish, president and CEO of Anthem said, “The Cigna team has built a set of capabilities that greatly complement our own offerings and the combined company will have a competitive presence across commercial, government, international and specialty segments. “The complementary nature of our businesses will allow us to leverage the deep global health care knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalized solutions across diverse life and health stages and position us for sustained success,” said David M. Cordani, president and CEO of Cigna. The transaction is expected to close in the second half of 2016, pending state regulatory approvals.  Anthem is confident in its ability to obtain all necessary regulatory and other approvals.

Insurance Commissioner Dave Jones said, “California’s health insurance market already suffers from consolidation with the four largest health insurers in the individual market controlling more than 85% of the market. Further consolidation will result in even less competition among health insurers and will leave consumers and employers with fewer choices and the potential for greater premium increases. Studies of prior mergers of health insurers found that health insurance prices increased as a result of mergers. “Health insurers are enjoying record share values and profits, which are paid for by consumers and employers. There is no requirement that any savings from these mergers be passed along to consumers or employers. In California, there is no authority to reject excessive health insurance rate increases, unlike 35 other states. We will review the mergers based on what is best for California consumers and employers. We will also work closely with other state and federal regulators,” he added.

Steven Stack, MD, president of the American Medical Association said, “The lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases, and pursue corporate policies that are contrary to patient interests. Health insurers have been unable to demonstrate that mergers create efficiency and lower health insurance premiums…The U.S. Department of Justice has recognized that patient interests can be harmed when a big insurer has a stranglehold on a local market. Federal and state regulators must take a hard look at proposed health insurer mergers. Antitrust laws that prohibit harmful mergers must be enforced and anti-competitive conduct by insurers must be stopped.” “Based on federal guidelines, the proposed Anthem-Cigna merger would be presumed to be anticompetitive in the commercial, combined (HMO+PPO+POS) markets in nine of the 14 states (NH, ME, IN, CT, VA, CO, GA, NV, KY) in which Anthem is licensed to provide coverage,” he added.

An AMA study of the 2008 merger involving UnitedHealth Group and Sierra Health Services found that premiums increased after the merger by almost 14% compared to a control group. The study reveals a serious decline in competition among health insurers with nearly three out of four metropolitan areas rated as highly concentrated. In fact, 41% of metropolitan areas had a single health insurer with a commercial market share of 50% or more.

Insurance Commissioner Responds to Insurer Denials of Mental Health Treatment

Insurance commissioner Dave Jones issued the following statement about a 60 Minutes story about insurer denials of coverage denials:

 60 Minutes featured a story last night about Anthem Blue Cross’ denial of coverage for patients needing mental health treatment. I am very pleased to see that 60 Minutes has brought national attention to our disputes with Anthem Blue Cross over their denial of coverage for mental health treatment. Medically necessary mental health treatment, including residential mental health treatment, is required to be covered under mental health parity laws. 

The California Department of Insurance has taken aggressive action to enforce state mental health parity law. The department has initiated enforcement actions against major health insurers in California, filed legal arguments on behalf of patients denied mental health treatment in state and federal court, issued new regulations and directly assisted policyholders who were denied coverage by their health insurer for mental health care. We have been fighting to protect consumers from this type of discrimination for years, said Jones. 60 Minutes highlights Anthem Blue Cross’ history of denying coverage for vital mental health treatment despite mental health parity laws, but they are not the only insurer that has denied coverage for lifesaving care to those who suffer from mental illness. If a patient is denied medically necessary care, such as residential care for an eating disorder or behavioral health treatment for autism, the Department of Insurance is here to help the policyholder get the coverage they are entitled to under the law. This 60 Minutes feature puts a national spotlight on the all too common practice of denying people with severe mental illness the medical care to which they are entitled, continued Jones.

Jones filed amicus briefs on behalf of the patients in two recent cases where coverage for mental health treatment is at issue. In Harlick vs. Blue Shield, the department submitted an amicus brief to the Ninth Circuit Court of Appeals on behalf of a policyholder who sued to get coverage for treatment for anorexia after her insurer denied her claims. The department then submitted an amicus brief to the California Court of Appeal on behalf of the plaintiff in the Rea vs. Blue Shield case. The plaintiff in Rea was also seeking coverage for medically necessary treatment for anorexia 

Additionally, the Department has required health insurers to make changes to their policies to comply with mental health parity law.

Another example of Commissioner Jones’ efforts to protect consumers with mental illness involved recent regulations he issued to make sure policyholders obtain coverage for medically necessary treatment for autism. 

The mental health parity regulations will help end improper insurer delays and denials of medically necessary treatments for people with autism, said Insurance Commissioner Dave Jones. This regulation provides clear guidance to the industry, stakeholders and consumers on the requirements of the Mental Health Parity Act.

Prior to these new regulations it was not uncommon for health insurers to delay or deny medically necessary treatment for individuals with autism. The regulations further define the circumstances in which insurers must cover behavioral health treatments for autism. 

State and federal mental health parity laws are in place to prevent health insurers from denying coverage for mental health care. State law (Insurance Code 10144.5) requires health insurance policies to cover diagnosis and medically necessary treatment of severe mental illnesses for patients of all ages and of serious emotional disturbances of a child under the same terms and conditions applied to other medical conditions. Bipolar disorder and bulimia, the conditions suffered by the two women featured in the 60 Minutes segment, are among the severe mental illnesses for which treatment must be covered.

Last Updated 05/25/2022

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