- Yesterday, the pending $54 billion acquisition of Cigna by Anthem underwent public review by the California Department of Insurance and its commissioner Dave Jones.
- Jones, who has plans to run for state attorney general in 2018, must approve or reject the deal alongside the state's Department of Managed Care, which has already held its own hearings. A rejection could potentially crush the deal.
- There are currently three main insurers that constitute 75% of the California market: Kaiser Permanente (42%), Anthem (20%), and Blue Shield of California (15%). Anthem's market position would be increased by the merger, which has raised concerns about competition. Jones has consistently challenged large insurers as a consumer advocate.
According to California Healthline, there are several major factors against the Anthem/Cigna merger, as well as the Aetna/Humana deal. One is overlap in market share - Anthem and Cigna compete for subscribers and would reduce competition in 31 California counties, Tam Ma, attorney for the nonprofit advocacy group, Health Access California, told CHL.
However, Anthem spokesman Darrel Ng said the companies have limited overlap and the merger would allow them to provide better consumer choices, quality, and maintain affordability.
Yesterday, Jones questioned the merger's benefits, reports California Healthline, noting the Department of Insurance hearing "took a more pressing tone than a related hearing held by the Department of Managed Health Care earlier this month."
Jones and a panel of physicians grilled the companies about what benefits the planned merger will bring. He released a statement after the hearing stating, "This merger would create the nation's largest health insurer, which could have a significant impact on California's consumers, businesses, and health care marketplace...I am considering what is best for consumers and the overall marketplace. Anthem and Cigna bear the burden of demonstrating this proposed merger is in the best interest of the California consumers and the healthcare marketplace. The public record will remain open until April 1."
He added a decision will be made in the coming weeks.
It should be noted that Jones recently greenlit the $6.8 billion planned merger of Centene and Health Net. Centene anticipates the acquisition will make it the largest Medicaid insurer in the country, with roughly 6 million members.
If the Anthem/Cigna deal is rejected, according to the publication, it could affect the stock market. If either state insurance regulator approves the deal, it could be with specific conditions. Yet, besides California, the merger is still under review by the Department of Justice. The next hearing up for the state's department of insurance is the pending Aetna/Humana merger.