AMA Warns of 'Negative Consequences' of Anthem-Cigna Merger

The American Medical Association says it has serious concerns about a mega-merger announced Friday between two of the nation’s largest private health insurance companies.

Anthem Inc. on Friday said it will acquire Cigna Corp. for $54.2 billion (or about $188 per share). The deal would make the combined firm the nation’s largest insurer by membership and also give the company a tremendous amount of leverage when negotiating with providers.

In a press release Friday morning, AMA President Steven J. Stack, MD, said such proposed mergers threaten to reduce competition and choice.

“To give commercial health insurers virtually unlimited power to exert control over an issue as significant and sensitive to patient health care is bad for patients and not good or the nation’s health care system,” he said.

Stack said an AMA study found 41% of metropolitan areas in the US already have a single health insurer with a market share of 50% or more. He also said that under federal guidelines, “the proposed Anthem-Cigna merger would be presumed to be anticompetitive in the commercial, combined (HMO+PPO+POS) markets in nine of the 14 states in which Anthem is licensed to provide coverage.”

Those nine states are New Hampshire, Maine, Indiana, Connecticut, Virginia, Colorado, Georgia, Nevada, and Kentucky.

When UnitedHealth Group bought Sierra Health Services in 2008, an AMA study found that premiums jumped by 14% compared to a control group.

In their press release announcing the merger, Anthem and Cigna suggested that the deal will create new efficiencies that will make the healthcare market function more efficiently.

“The complementary nature of our businesses will allow us to leverage the deep global health care knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalized solutions across diverse life and health stages and position us for sustained success,” said David M. Cordani, the president and CEO of Cigna, in a press release. Cordani will become president and chief operating officer of the combined company.

However, Stack said suggested those “efficiencies” may not be consumer-friendly. He said the merger proposal should trigger an intense review by federal and state regulators.

“Antitrust laws that prohibit harmful mergers must be enforced and anticompetitive conduct by insurers must be stopped,” he said.