Dive Brief:
- Representatives of the American Medical Association (AMA) and Medical Society of the State of New York (MSSNY) appeared Thursday at a hearing before New York State Department of Financial Services to ask state insurance regulators to reject Anthem's proposed $54 billion acquisition of Cigna, arguing the deal would be "bad medicine" for New York. Anthem is the parent company of New York's Empire Blue Cross/Blue Shield.
- The groups suggested the deal would threaten New Yorkers' healthcare access, quality, and affordability by limiting competition in some regional health insurance markets.
- The AMA presented regulators with the group's own analysis, which concluded the proposed merger would raise Anthem's market power to anti-competitive levels in Long Island, as well as raise concerns for the New York City metropolitan area and the Hudson Valley.
Dive Insight:
While New York's position on the deal--as well as those of some other states with a stake in the outcome--could prove significant factors, it already appears to be in trouble. The DOJ's challenge against the proposed merger illustrates concerns on the part of federal regulators, and adds a wrench to the pair's timeline, as a ruling isn't expected until late January and the deal would need to close by the insurers' April 30 contractual deadline or Cigna might pull out.
Cigna was reported to have gotten cold feet on the deal after the companies traded barbs in May, and Cigna was noted in August to be arranging backup plans, suggesting it to be skeptical that the merger will go through.
Opponents to the deal aren't taking that possibility for granted, however, as evidenced by the hearing in New York.
MSSNY President Malcolm Reid argued further consolidation would have "serious repercussions" in some markets and allow the remaining players to decide the scope and quality of healthcare. Reid further argued that such market power by big insurers undermines the patient-physician relationship.
Meanwhile, AMA antitrust attorney Henry Allen argued that Anthem has yet to substantiate its argument that a merger would enable efficiencies that would reduce healthcare costs. "To the contrary, economic studies have shown that rather than passing any benefits from efficiencies to consumers, health insurer mergers actually result in higher premiums," Allen said. "In effect, the costly process of merging two giant insurance bureaucracies is born on the backs of patients and employers."
"Competition, not consolidation, is the right prescription for New York's health insurance markets," Allen argued.