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Anthem-Cigna Health Insurance Merger Suit Starts on November 21

The main reasons why the Department of Justice filed a suit against two health insurance mergers relates to market competition and negative impacts on consumer interests.

The lawsuit against the Anthem-Cigna health insurance merger had its first pretrial conference this past Monday, according to The Coalition to Protect Patient Choice. Judge Amy Berman Jackson said that the two parties met to have a discussion on “mechanics, not merits.”

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Jackson discussed the Department of Justice’s motion to dismiss particular statements by expert witnesses and 130 exhibits that both parties had brought forward. However, Judge Jackson seems to be in favor of having evidence that can be considered opinion or hearsay brought into the trial against the Anthem-Cigna health insurance merger. The reasoning for this is due to no jury being present.

Since only Judge Jackson will be allowed to make the final decision, she will be able to decide how important each opinion and statement may be including expert witnesses discussing the state of the market.

The companies Anthem and Cigna positioned as many as 43 third party witnesses to take the stand. However, the declarations from these individuals consisted of opinions without precedent regarding the state of the market after the health insurance merger was completed. Anthem and Cigna also had incorporated news stories and commercial market reports in the case, but Judge Jackson was wary about the inclusion of these pieces. Jackson stated that the “flaws are obvious” in these documents.

While Judge Jackson was comfortable with the idea of unsubstantiated comments due to no jury in the health insurance merger case, she seemed unhappy with the opinion statements Anthem included.

The way court cases are run often include expert witnesses that discuss market data and provide their own inferences instead of relying on other parties’ conclusions. Afterward, these witnesses are cross-examined. However, through these third party declarations, the defendants had found a way to maneuver around the cross-examination, which is what Judge Jackson objected to.

One area that will not have much discussion around is that of the public insurance marketplaces since the Department of Justice had put the exchanges off the table with regard to the health insurance merger lawsuit. The trial for the Anthem-Cigna health insurance merger suit will begin on November 21, 2016.

The reasons behind why the Department of Justice initially filed a lawsuit this past summer against two major health insurance mergers are the harm to competition the acquisitions could cause, negative impacts to consumers such as higher premium costs and fewer benefits, and potential harm to seniors with Medicare Advantage plans.

“Anthem has had to respond by competing harder and keeping costs down to prevent Cigna from winning away Anthem business. All this competition would be lost if this merger was to take place,” Principal Deputy Associate Attorney General Bill Baer said during a press conference.

“Our investigation showed that Aetna’s acquisition of Humana would hurt Seniors with Medicare Advantage plans. This deal would eliminate Humana as a fierce competitor. Seniors would see their choices limited, their benefits reduced, and their premiums go up,” Baer continued. “Our lawsuits aim to protect the many Americans who depend on these four health insurance companies for their coverage.”

Bill Horton, Healthcare Practice Attorney at Jones Walker, told HealthPayerIntelligence.com about the argument the payers are making for these health insurance mergers.

“Essentially, the companies involved in the mergers are arguing that in order to continue doing business, in order to be viable in the changing dynamics of the health insurance market, they’ve got to get bigger and got to consolidate so that they can improve efficiencies and survive,” Horton said. “The insurance companies argue these deals will enable them to become more efficient and will be able to consolidate administration as well as executive management.”

Additionally, the stakeholders on the other side of the equation argue that they would lose the ability to negotiate prices since the mergers would give the payers more power to control costs.

“[The payers] argue the mergers would allow them to divert more of resources to improving products and service. Consumers, hospitals, and physicians tend to take the other side of that argument. They say that if you eliminate this competition, in a market that already lacks competition, you’re going to give these payers more power to dictate prices,” he concluded. “Consumer advocates say the savings that may be produced from these consolidations are not going to be passed onto consumers in the form of lower premiums or greater benefits. They’re going to be retained by  the companies for executive compensation or greater dividends to shareholders.”

 

Dig Deeper:

How Health Insurance Mergers Could Change the Payer Industry

How Payers Could Succeed in ACA Health Insurance Exchanges

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