Considering Anthem and Cigna's past behavior, California consumers better prepare themselves for the worst if state regulators don't do the right thing on their proposed merger.
Today, the Department of Managed Health Care held a hearing on the plan, and consumer advocates and medical providers whacked both on premiums, services, benefits and reimbursements. Consumer Watchdog sent a letter to the DMHC
, urging it to require Anthem and Cigna to commit to a series of consumer protections on prices and benefits to address the companies’ past harmful practices, or reject the merger plan if the companies refuse.
An American Medical Association analysis of 2015 health plan enrollment data shows that most population areas in California will suffer from reduced competition in the market if the merger is approved, and identifies nine metropolitan areas where the merger exceeds federal antitrust guidelines for preserving competition. California is one of only 17 states with areas where the merger is “presumed likely to enhance market power” under the federal measure.
The metropolitan areas the data shows will be hardest hit include: Santa Cruz-Watsonville, Santa Ana-Anaheim-Irvine, Santa Barbara-Santa Maria, Salinas, Oxnard-Thousand Oaks-Ventura, Los Angeles-Long Beach-Glendale, Bakersfield, El Centro, and Modesto. The analysis uses a U.S. Department of Justice measure of market competitiveness called the Herfindahl-Hirschman Index and Department of Justice/Federal Trade Commission guidelines to measuring competition in mergers.
"Anthem has imposed hundreds of millions of dollars in unjustified rate increases on California consumers, been caught misleading consumers, and consolidation will only make it worse," said Carmen Balber, executive director of Consumer Watchdog "DMHC should reject the merger if Anthem and Cigna refuse to make enforceable promises to protect Californians from enduring reduced services, higher premiums or bearing any costs of the merger. Anthem and Cigna should be forced to get better before being allowed to get bigger."
Anthem would leapfrog Kaiser as the largest health plan in California if the proposed merger is approved.
In its letter, Consumer Watchdog called for
: enhanced rate review to ensure the costs of the merger are not passed on to California policyholders; detailed disclosure of any revenues sent out of California to the parent company; a full review of provider networks pre-merger; a commitment that merger “savings” will not be achieved by reducing benefits; a commitment by the companies to hold rate increases to the rate of inflation for five years; and, a commitment to not impose rate increases deemed “unreasonable” by Department regulators. DMHC should reject the merger if the companies refuse to make these commitments to protect consumers, wrote Consumer Watchdog.
Anthem and Cigna claim that their merger will increase competition, improve care and benefit consumers. Historically, healthcare mergers generally lead to the opposite: fewer choices, inadequate physician networks and higher premiums. There is no evidence that mergers ever produce the benefit improvements or consumer savings promised by merging insurers.
Cigna and Anthem have dismal records in California and across the country on rate increases, providing adequate provider networks and timely, fair patient service.
Since 2013 Anthem has imposed $145 million in rate hikes deemed by regulators to be excessive and unjustified. Anthem has also failed to keep its promises to California policyholders about provider networks, in both its commercial
and Medi-Cal business.
The federal government has held Cigna
accountable for misrepresenting coverage and discriminating against its most vulnerable patients. In January, the Centers for Medicare and Medicaid Services banned Cigna from marketing its Medicare products to new customers, writing that “Cigna has experienced widespread and systemic failures” and it has “had a longstanding history of non-compliances” with requirements. Violations resulted in enrollees experiencing delays or denials in receiving needed medical services and prescription drugs, and increased out of pocket costs, according to CMS.
Anthem and Cigna’s past failures to provide the health care consumers they promised, at prices that are fair, should be all the prompting DMHC needs to use its full power to protect Californians before agreeing to allow a merger to proceed.