Dive Brief:
- The Anthem/Cigna trial heard testimony this week from a healthcare economics expert who argued the proposed $48 billion merger would hurt competition and impede industry innovation, as argued in the Justice Department's antitrust case, Bloomberg reported.
- If combined, the powerhouse insurers could increase prices for employers across the country, said economist David Dranove of Northwestern University’s Kellogg School of Management in Evanston, Illinois.
- Meanwhile, court testimony unsealed this week has revealed ongoing issues between Anthem and Cigna, with Cigna appearing to have become an increasingly reluctant partner in the deal, reported The Wall Street Journal.
Dive Insight:
Among Dranove's main arguments was a merged Anthem/Cigna would have the ability to raise prices between 5% and 10% without losing business because of the reduction in insurer options.
Anthem continued to counter that argument Tuesday in court, saying the combined company would be efficient and innovative, and that the joining of forces would not actually reduce competition as they define it. Cigna, however, did not appear to support that position.
The deal has proven a strange case given the long-simmering contentiousness between the potential partners, which has included "cold feet" by Cigna, bickering from both sides, and mutual accusations of breaches to the merger agreement.
According to testimony previously deemed confidential but unsealed Monday by U.S. District Judge Amy Berman Jackson, Cigna has ceased to participate in post-merger integration planning and Anthem has attempted to continue planning on its own, The Wall Street Journal reported. The testimony further revealed that Cigna is concerned Anthem's integration strategy will weaken Cigna's network and value and doesn't support that strategy, and that Cigna has suggested a weakening of its offerings could hurt competition--which supports the DOJ's antitrust case.
The disagreements between the pair have been raised by the DOJ as a major argument against the likelihood that a merger could bring increased efficiencies, though Anthem has dismissed those issues as any impediment to moving forward.