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.

Employers Reject Private Exchanges

In a departure from other industry polls, 55% of employers say they will never stop sponsoring employee health plans in favor of giving employees money to buy coverage through a private exchange The survey of more than 330 employers was conducted by National Business Coalition on Health and Benz Communications. Thirty-two percent are considering moving to a private exchange in three to five years; 8% are considering moving in the next three years, and just 5% said they already use a private exchange to provide employees’ health benefits.

Respondents are largely concentrated in the service and technology industries, mainly in the Southeast and West regions of the United States. Most respondents’ have 1,000 to 5,000 U.S.-based employees.

Seventy-three percent of employers say that the ACA will have the biggest effect on their benefit communication strategy in the year ahead. However, 39.4% are maintaining benefit plans and coverage levels without increasing employee costs, such like deductibles, coinsurance and copays. Slightly more than 32% will maintain benefit and coverage levels, but increase employee costs.  When asked how their company is preparing to comply with the ACA Cadillac tax in 2018, 26% say they are maintaining benefit plans and coverage levels without increasing employee costs; almost 20% are maintaining levels, but increasing employee costs and 15% are reducing benefit plans and coverage levels while increasing employee costs. For more information, visit http://www.nbch.org/ibcsurvey.

Last Updated 08/10/2022

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