Anthem Inc.’s proposed $48 billion acquisition of rival Cigna Corp. just ran into a bumpy patch, as the insurance commissioner of the nation’s largest state urged federal officials to block it.
California Insurance Commissioner Dave Jones on Thursday called the deal “anti-competitive” and said it would hurt consumers, businesses and the state’s health insurance market.
“When it comes to the Anthem and Cigna merger, bigger is not better for California’s consumers or the health insurance market,” Jones said in a written statement.
He said if the merger moves ahead, Indianapolis-based Anthem’s market share would exceed 50 percent in 28 California counties and 40 percent in 38 counties. That would negatively impact consumers “with likely reductions in access, quality of care and affordability of health insurance,” Jones said.
Jones’ statement carries no official power, since California is one of only a handful of states where the Insurance Department doesn’t have jurisdiction over such matters. California’s Department of Managed Health Care is the agency that will issue an official ruling on behalf of the state, and has yet to do so.
So far, 12 of 26 states that would be affected have approved the combination. The Indiana Department of Insurance was the latest, giving the green light on May 26.
The Department of Justice has not said when it will rule on the deal.
California held a public hearing March 29, where members of the public, Anthem and Cigna executives, consumer advocates, medical professionals and merger experts provided testimony.
But as far as Jones is concerned, Anthem did not provide adequate evidence for its claim that it expects the merger to result in $2 billion in efficiencies. Nor did the company guarantee that any savings would benefit consumers with lower prices, he said.
“Anthem provided only vague, speculative and impossible-to-verify assertions,” Jones said.
In response, Anthem issued a statement Thursday that said it has been working with federal and state regulators for 10 months regarding the merits of “this compelling combination.”
“We do not believe that the California Department of Insurance’s opinion is based on the true merits of this transaction,” Anthem said. “We are confident that the highly complementary nature and limited overlap of our organizations that will benefit the complex and competitive health insurance markets will be reviewed on the facts by the DOJ and appropriate state authorities.”
Anthem’s shares were up 1.4 percent to $132.41 in late afternoon trading.