Groups Says California Should Reject the Anthem-Cigna Merger

Consumer Watchdog called on Insurance Commissioner Dave Jones to reject a proposed merger of Anthem and Cigna. Carmen Balber with Consumer Watchdog said, “Insurance industry consolidation has gone too far in California, costing consumers in the form of higher prices, reduced benefits, narrower networks, and fewer choices. It is no longer believable to claim that making the few insurance giants larger could benefit consumers. It’s time to draw a line in the sand. The only action that truly protects California policyholders is for the Dept. of Insurance to reject the Anthem-Cigna deal.” Nine metro areas in California will be among the hardest-hit in the nation if the merger is approved, and nearly every major population center in the state could be affected, according to an American Medical Association analysis using federal merger guidelines,” she said.

The following is a summary of a statement prepared by Consumer Watchdog: If the Anthem-Cigna merger proceeds, Anthem will gain a near-monopoly in the self-insured market at 69% of the market, meaning higher costs and less options for large companies that pay Anthem or Cigna to administer their health plans and employ nearly 4 million Californians. A merged Anthem-Cigna would surpass Kaiser to become the largest insurer in the state. Regulators cannot exact enough concessions from the companies to protect consumers from the negative impacts of an Anthem-Cigna merger.

Consumer Watchdog recommends these conditions for approving the merger:

  • Anthem should commit to not implementing rate hikes that regulators find to be unreasonable.
  • Anthem should be prohibited from upstreaming profits to its parent company while increasing premiums.
  • Anthem should have to disclose details of any administrative services payments to its parent company out of state. This would allow the public to determine whether the payments have been inflated to hide upstreaming of California policyholder money to shareholders.
  • Anthem should not be allowed to remove reserves from California or otherwise require California policyholders to pay for severance, retention, or other compensation packages for executives in connection with the merger.
  • Anthem should immediately submit its provider networks for review.
  • Anthem should commit to expanding network size for all plans that give consumers access to less than 50% of providers in the area.
  • Anthem’s filings with the Dept. of Insurance should be public documents. Grants of confidentiality should only be allowed sparingly, with explanation of the sensitive nature of the withheld documents, if at all.
  • Anthem should be subject to steep penalties for violating any provision of these undertakings, and revocation of approval if there is a pattern of violations.

Half of California Voters Can’t Afford Health Care

Fifty percent of California voters have difficulty affording health care, and 73% say insurance costs are the most difficult to afford, according to a survey by Consumer Watchdog. Consumer Watchdog is pushing a ballot measure that would enable the Insurance Commissioner to reject any rate increase that he feels is too high.

Health insurance premiums rose 170% in the last decade, more than five times the 31.5% rate of inflation over the same period, according to the California HealthCare Foundation. In recent years, consumers’ health insurance premiums continued to rise in the double digits even as medical spending slowed. The Centers for Medicare and Medicaid Services said in January that health spending increased just 3.9% in 2011, a record low pace of growth for the third year in a row. The Bureau of Labor Statistics Consumer Price Index said the cost of medical care services increased just 3.7% in 2012.

The Health Insurance Rate Public Justification and Accountability act is modeled after California’s successful insurance reform law, Proposition 103, which regulates auto, home and business insurance rates and requires insurers to get approval for rate increases. For more information, visithttp://www.consumerwatchdog.org

WellPoint Sees Jump in Profits & Rate Increases

WellPoint announced a 24% profit increase in the second quarter of 2013 compared to last year. The company’s stock recently hit an all-time high of $90 per share. Mark Reback of Consumer Watchdog complains, “WellPoint and the other big health insurers are continuing to be two-faced when they preach austerity to their customers in order to raise premiums, then turn around and announce large profits and a record share price to shareholders. As federal health reform requires health insurers to disclose more information online, it will be harder for them to say one thing to customers and the opposite to Wall Street and investors. Most consumers remain vulnerable in many states where there are no regulations to reject excessive rate hikes, even when company profits exceed projections.” Anthem Blue Cross, WellPoint’s California subsidiary, recently imposed a rate hike on more than 250,000 small business customers. For more information, visit http://www.ConsumerWatchdog.org.

Last Updated 01/19/2022

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