California regulators key in fight for health insurance mega-mergers

Consumer advocates are putting pressure on regulators in the Golden State to scrutinize deals between Anthem and Cigna, and Aetna and Humana

Insurance News


In addition to federal scrutiny, the proposed mergers between four of the country’s top health insurance companies may be facing review from regulators in California.

According to an LA Times report, consumer advocates are asking regulators in California and a dozen other states to reconsider the deals between Anthem and Cigna, and Aetna and Humana amid concerns that the transactions will result in higher prices and less choice.

Anthem has proposed buying rival Cigna for $54.2 billion, and Aetna wants to acquire Humana for $37 billion. If the deals go through, just three health insurers will be in charge of nearly half of the US commercial health insurance market.

Californians will be further affected by another proposed deal: Centene’s $6.8 billion acquisition of Health Net Inc. in Woodland Hills.

Unsurprisingly, the mergers are being subject to a number of reviews, including from the Department of Justice and committees in the House of Representatives and the Senate. Presidential hopeful Hillary Clinton has also included tighter scrutiny of such mega deals as part of her campaign rhetoric.

In California, the state’s two insurance regulators have begun to hold public hearings to examine all proposed deals and more are expected in coming weeks. The Anthem-Cigna deal is under especial scrutiny as it sells Blue Cross policies in the state. If the deal goes through, Anthem will become California’s largest health insurance carrier, beating out former leader Kaiser Permanente.

The other acquisitions will also rival Kaiser and Blue Shield of California, as Aetna and Health Net are poised to become bigger players in the state.

Consumer advocates want regulators to consider imposing limits to rate increases, requiring carriers to expand their provider networks and make other pledges to improve patient are in order to win approval at the state level.

By doing this, advocates and industry analysts hope to impose greater regulation and impose measures of consumer protections in the face of such market-changing mergers.

“States are the most critical regulator of health insurance markets,” David Balto, a former policy director at the Federal Trade Commission and an attorney for the Coalition to Protect Patient Choice, told the Times. “They can protect consumers from narrowing networks and premium increases and impose a wide variety of other conditions.”

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