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Portfolio > ETFs > Broad Market

Anthem-Cigna merger could drive up prices in key markets

By Dan Cook

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Is the American Medical Association taking over the role in mergers once played by the U.S. Department of Justice? A newly released analysis of the proposed Anthem-Cigna merger suggests just that.

In a 12-page analysis of the competitive impact of the merger, the AMA concludes that the marriage will be very bad for consumers in 10 of the 14 markets in which Anthem operates.

The AMA’s shot at the merger, still awaiting federal blessing, comes on the heels of an American Hospital Association letter to DOJ warning that the merger entity could easily “cost consumers billions of dollars in higher health care costs” through even small price hikes in certain markets.

AMA prefers to let its detailed market share analysis speak for itself.

By using commercial market share and concentration calculations based upon Anthem and Cigna’s current coverage, the report says that dangerous levels of concentration would exist post-merger in New Hampshire, Indiana, Connecticut, Maine, Virginia, Georgia, Colorado, Missouri, Nevada and Kentucky.

But consumers in the other four states — Ohio, California, New York and Wisconsin — aren’t shielded from a price increase threat, the AMA says. The threat is just slightly less ominous.

The AMA calls on DOJ to study the “significant competitive concerns” its study raises and emphatically states that the merger needs to be closely studied by DOJ before approval is given.

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