American Medical Association Says No to Anthem-Cigna Merger

The Anthem-Cigna merger could drive down competition and raise costs in New York’s insurance market.

The American Medical Association and the Medical Society of New York have both recently expressed concerns about the pending Anthem-Cigna merger to the New York State Department of Financial Services in a recent hearing.

Both organizations recommended that state insurance regulators reject the deal, since it would threaten healthcare access, quality, and affordability, according to the American Medical Association. States from around the country have also expressed their concerns with the merger, and support blocking it through a lawsuit filed by the Department of Justice.

The proposed merger could potentially reduce competition in New York’s insurance market, which could have harmful effects on patients and insurers.

“Removing a major competitor would have serious repercussions within highly populated areas in New York State where the commercial health insurance market is already highly concentrated or moderately concentrated,” said Medical Society of New York President Malcolm Reid, MD. “A further consolidation of these markets would allow the remaining insurers to determine the scope, coverage and quality of healthcare. As it is, health plan networks are already too narrow, and premiums are already too high.”

In the hearing, physician representatives from the American Medical Association presented their recent analysis of the state’s commercial health insurance markets, which examined the Anthem-Cigna merger in terms of the antitrust guidelines set by the federal government.

The merger would be able to increase Anthem’s market power in Long Island, and consequently, drive down competition, according to the analysis. They also said that the merger would affect competition levels in New York City and in the Hudson Valley.

Consolidation would also mean that costs may increase for patients, even though insurers say that it will decrease them, according to the American Medical Association.

“Anthem has been unable to substantiate its claim that the merger would create efficiencies that would lower healthcare costs,” said Henry Allen, the American Medical Association’s top antitrust attorney. “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. In effect, the costly process of merging 2 giant insurance bureaucracies is born on the backs of patients and employers.”

The American Medical Association also notes that the merger may increase the role of insurers in clinical decisions, which could potentially harm the patient-physician relationship. They believe that increased competition among existing insurers will be the best way to move forward, and strongly recommends that the merger be denied.

“Competition, not consolidation, is the right prescription for New York's health insurance markets,” Allen concluded. “Competition among health insurers can lower premiums, enhance customer service, and spur innovative ways to improve quality while lowering costs. Patients benefit when they can choose from an array of insurers who compete for their business by offering desirable coverage at competitive prices.”