Anthem answers Department of Justice complaint on Cigna merger
Acquisition would increase competition and make healthcare more affordable for consumers, Anthem says.
Anthem headquarters
Anthem has answered the Department of Justice's injunction attempting to block its $54 billion purchase of Cigna, saying the merger would increase competition and result in cost savings, making healthcare more affordable and accessible to consumers.
"Indeed, the complaint itself admits that Anthem today generally obtains lower rates from healthcare providers than Cigna does and that the combined firm likely will be able to 'reduce the rates' that healthcare providers charge to Anthem and Cigna customers," according to its answer filed July 26 in U.S. District Court for the District of Columbia.
Most large employers buy self-insured plans and therefore retain the risk of employees' healthcare costs, meaning that the lower rates obtained by the combined firm will automatically flow to consumers, said Anthem's attorneys, Christopher Curran and J. Mark Gidley of White & Case in Washington, D.C.
[Also: Anthem CEO stresses company's commitment to pending merger with Cigna]
While other insurers are withdrawing from the exchange market, a combined Anthem/Cigna would increase consumers' access to the exchanges, with the combined entity entering into new territories in nine states where they are not currently participating, Anthem said.
Anthem has successfully bargained for favorable rates from healthcare providers, which has led to savings for customers, it said.
Anthem has requested an October trial date, according to information released by CEO and President Joe Swedish during a second quarter earnings call Wednesday.
The Department of Justice on July 21 filed lawsuits to block the Anthem/Cigna merger and the $37 billion acquisition of Humana by Aetna, in deals that would reduce the number of large insurers from five to three.
[Also: DOJ sues to block Anthem/Cigna, Aetna/Humana mergers as companies plan to fight back]
Restricted competition in key markets would harm consumers and are illegal due to antitrust laws, Attorney General Loretta Lynch said in releasing the DOJ's decision.
Anthem's defense will be hard to substantiate in court, according to Michael DeLong, of the Law Offices of David A. Balto in Washington, D.C.The law office provides counsel on antitrust matters and represents parties before the Antitrust Division of the Department of Justice.
"Anthem asserts an affirmative defense that new and rapid entry and expansion by competitors into health insurance will protect competition, consumers, and consumer welfare. But entry into health insurance markets is very difficult, and new companies often struggle to survive," DeLong said in a statement.
[Also: California Insurance Commissioner urges feds to block $54 billion Anthem-Cigna deal]
"Anthem denies virtually all of the DOJ's factual allegations of market share. However, these market shares are well vetted and the product and geographic markets they dispute have been widely used, including in state department of insurance investigations of the Anthem-Cigna merger," DeLong said.
Anthem's claims of increased efficiencies totalling $2 billion have already been rejected by the California Department of Insurance, and courts have not been keen on finding that efficiencies outweigh competitive harm, he said.
Twitter: @SusanJMorse
