The Deal That Just Won’t Die: Anthem-Cigna Merger Appeal

By Jill Zorn

sgxyrj39-1368158231Friday, March 24 was a momentous day for those who care about access to quality affordable care.

Yes, it was the day that Donald Trump and Paul Ryan temporarily gave up on passing the (Un) American Health Care Act, which would have led to 24 million Americans losing health care coverage (As I write this, it seems likely that the Republicans are resurrecting an even worse version of the bill – so stay tuned for updates).

But March 24 was also the day that Anthem was attempting to bring their proposed merger with Cigna back to life, arguing their case before a three-judge panel in the U.S. Court of Appeals.  The insurers filed their appeal in February, after the U.S. Department of Justice (DOJ) won their lawsuit to block the merger.  Connecticut’s Attorney General, George Jepsen, and the Attorney Generals of 10 other states, joined with DOJ in fighting the merger.

On March 24, DOJ and the insurers squared off in court again.   Anthem argued that consumers and employers would benefit from the merger because Anthem’s increased bargaining power would lead to lower provider fees and therefore lower premiums.  DOJ attorneys disagreed, stating that there was no way to know if lower reimbursement rates would translate into actual cost savings.  They also pointed to the central issue that the merger would reduce competition.  Go here and here to read more about the arguments made by both sides and the questions the judges asked.

As we have written in previous blogs, there is little evidence to support that monopolies pass their savings on to consumers.  Instead, the opposite usually happens — prices go up.

Amicus Brief 

In preparation for the Court of Appeals case, several consumer organizations signed on to an amicus brief filed by anti-trust attorney David Balto, director of the Coalition to Protect Consumer Choice.  Universal Health Care Foundation of Connecticut was one of the organizations to sign on to the brief.  Other signers include Connecticut Citizen Action Group, California Reinvestment Coalition, Consumers Union and United States Public Interest Research Group.

The amicus, or “friend of the court” brief focused was written to support the DOJ efforts to stop the merger and focused on issues of concern to consumers.  As Balto stated, “…This merger is clearly anticompetitive and any claimed costs savings would not benefit consumers one iota.”

Connecticut’s Attorney General, George Jepsen, also continues to argue against the merger.

Investigation into Trump-Anthem Contacts

While the DOJ continued their vigorous opposition to the merger in open court, concerns were raised about what is going on behind the scenes, now that the Trump administration and Attorney General Jeff Sessions are running the DOJ.

As reported by David Sirota of the International Business Times, Joseph Swedish, president of Anthem, spoke by phone with President Trump on March 14.  Anthem, which donated $100,000 to the Trump inaugural committee, did not comment on whether the merger was discussed.  Anthem’s headquarters is in Indiana, home state of Vice President Mike Pence.

Meanwhile, a former Anthem lobbyist is now being considered for the top anti-trust position in the DOJ.

A new nonprofit advocacy group, United to Protect Democracy, has called for the DOJ Inspector General to investigate whether there have been inappropriate contacts between the White House and DOJ regarding the merger.  The organization, founded by former Obama administration lawyers, wrote, “It would seriously undermine the rule of the law if the President or his political advisors were to direct or encourage the Department to alter course in an ongoing enforcement or litigation matter in order to benefit a political ally.”

Could the new administration be putting pressure on the DOJ to settle the case?  We should know soon, as a decision by the Court of Appeals is expected later this month.

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