With open enrollment season looming, the Connecticut Insurance Department released new data showing slipping membership figures for Anthem Blue Cross Blue Shield and Cigna, but with the two still wielding a mighty 64 percent market share as regulators prepare for hearings on whether to approve the combination.
In July, Bloomfield-based Cigna agreed to a $54 billion merger with Anthem, which is based in Indianapolis with its Connecticut office in Wallingford. The merger between the two companies is subject to approval by state and federal regulators as well as shareholders.
If approved intact in Connecticut, the merger would give the combined Anthem-Cigna more than triple the market share of the next closest competitor in Aetna, which is readying its own $37 billion merger with Louisville, Ky.-based Humana, which Aetna shareholders approved this week.
Aetna boosted its Connecticut enrollment by 115,000 members last year, nearly equal to the total 118,000 policy gain in Connecticut as residents and businesses enrolled in plans to comply with the federal Affordable Care Act, an increase of 5 percent across all carriers.
Anthem BlueCross BlueShield lost 58,000 policies in Connecticut last year, reducing its total to just under 1.1 million and dropping its market share to 44 percent from 49 percent in 2013. Cigna increased its Connecticut membership base by 6,000 policies, giving it 489,000 total and lowering its market share below the 20 percent threshold.
Speaking in mid-September at an investment conference sponsored byMorgan Stanley, Cigna CEO David Cordani said his company and Anthem have “de minimis” geographic overlap.
“Over the last half-a-dozen years … our growth strategy in the U.S. has been retain, expand, add,” Cordani said. “That’s our growth mantra from day one: earn the right to retain your business, earn the right to expand the relationship and then target the addition of new relationships to the portfolio.”
First, the companies must win approval for the creation of that combined portfolio in Connecticut. Ellen Andrews, executive director of the Connecticut Health Policy Project in New Haven, said it is entirely possible the Connecticut Insurance Department will allow Anthem and Cigna to retain their existing policyholder base if federal regulators approve the merger.
For her part, she said she is not comfortable with the concept of any one carrier wielding a two-thirds market share, even under the oversight of a Connecticut Insurance Department whose mission is in part to ensure carriers do not overcharge policyholders for coverage, but which also is concerned with not scaring off underwriters from doing business in Connecticut.
In his tenure as attorney general, U.S. Sen. Richard Blumenthal (D-Conn.) had a history of using his office to weigh in on rate cases with an eye on protecting consumers. Current Attorney General George Jepsen has intervened in insurance matters such as the dismissal of physicians from the Medicare Advantage Plan network of Oxford Health Plans parent UnitedHealth, but has not been as vocal on rates.
“Even though there’s some regulation, there‘s plenty of chances for mischief,“ Andrews said. “Blumenthal was great — he was all over it. Even if there wasn’t anything in (the) regulations that he could do anything about, he would use the bully pulpit to basically shame them and move them back. Jepsen has definitely not been as aggressive (in) holding them accountable.”
Healthy CT, one of two nonprofits to enter the Connecticut market in the past year alongside Massachusetts-based Harvard Pilgrim Health Care, closed its first enrollment season last year with 8,000 members, a bigger rate of growth than Cigna in Connecticut but well behind the surges by Aetna or ConnectiCare, the latter adding about 52,000 members for a 30 percent growth rate.
Any divestment of Cigna or Anthem policies would represent an opportunity for another existing or new underwriters interested in growing a policy base in Connecticut. If that scenario comes to be, Andrews hopes that continuity of care will be the driving force behind any decisions.
“’You take me from something where I have a long list of (doctors) and you throw me into something else for the greater good’— that doesn’t really do me a lot of good,“ Andrews said. “I’m probably going to leave it and find another (carrier).“
Date: October 22, 2015