Anthem’s proposed $54 billion acquisition of Cigna is undergoing public review by the California Department of Insurance.
Given the large scale of California’s health market, if the deal is rejected, the acquisition could ultimately fall apart despite meeting the approval of other state regulators.
For the merger to pass in California, both state insurance commissioner Dave Jones and the Department of Managed Health Care must express their approval of the deal.
The health insurance market in California is dominated by Kaiser Permanente, which commands 42% of the market. Anthem, in comparison, has 20%, and Blue Cross and Blue Shield of California takes 15%. HealthNet was previously at fourth place with 6% of California’s market, but it was recently acquired by the out-of-state Centene.
On paper, Anthem’s acquisition of Cigna should increase its market share, but an expert says otherwise. California State University Fullerton health policy professor Shana Charles posited that a merger between Anthem and Cigna would actually lead to the other major mergers in the region becoming stronger.
“For the regulators, the big question is whether or not a merger would make the market more competitive,” Charles told California Healthline. “Because Anthem is so big in California, that’s going to be a big concern.”
As Cigna and Anthem compete for subscribers, the deal would reduce health insurance competition in 31 counties, added Tam Ma, an attorney for nonprofit Health Access California. Ma then noted Anthem’s history of raising its premium rates even after state regulators have called the insurer out for such an unreasonable act, among other supposed faults the insurer committed.
“The big concern is, if they get bigger, are these problems going to get bigger?” asked Ma.
“Expanding access to affordable health coverage is the foundation of our combination with Cigna and will remain Anthem’s top priority . . . We are continuing to work with the Department of Justice and appropriate state regulators, and are confident that our proposed merger is being reviewed based on these facts, ” a spokesperson for Anthem said.
