As if the merger of Cigna CI into Anthem ANTM isn’t threatening enough to medical care providers, hospitals now say the combined entity will have added unfair market power through the national network of Blue Cross and Blue Shield plans.
The American Hospital Association, which represents some 5,000 hospitals and health systems across the country, is intensifying its criticism of Anthem’s acquisition of Cigna on a new front in a letter to federal antitrust regulators. Hospitals and doctors are already worried about the Cigna-Anthem merger and the proposed purchase by Aetna AET of Humana HUM taking the top five publicly-trade health insurers down to three.
As antitrust regulators enter an intense period of evaluation of these unprecedented mergers, hospitals say the Anthem-Cigna merger would make an already unfair monopoly worse.
The hospitals are taking issue with the national insurance network Anthem is a part of through the Blue Cross and Blue Shield Association, a trade group and lobby for 36 locally operated Blue Cross and Blue Shield companies that are able to market their Blue brand via licenses with the association.
“Cigna’s entry into the overall Blue System may augment the already considerable power of the Blue plan in every state,” Melinda Reid Hatton, senior vice president and general counsel for the American Hospital Association said in a letter this week to William Baer, assistant attorney general in the Justice Department’s antitrust division. “Blue plans currently dominate the health insurance market in most states. Collectively, Anthem and the other Blue plans control 105 million lives.”
Anthem operates as an investor-owned, publicly-traded Blue Cross plan, operating plans under the Blue Cross brand in 14 states. Other Blue Cross plans in the association include ownership structures that are either nonprofit or mutual plans owned by policyholders.
The hospitals say these plans with “Blue in their name” have the “highest brand familiarity of all health insurers” and that raises barriers to competition that will rise higher once Cigna and its 14.7 million members are added to the Blue system. Further, the hospitals say the Blue Cross Association’s rules link the plans together economically and for marketing efforts that will further dominate their regions.
But Anthem said its Blue Cross and Blue Shield license is limited to “only 14 states,” the insurer said in a statement. “Cigna products will not become Anthem BCBS products in states where we do not have a Blue license,” Anthem said in a statement responding to the hospital group’s letter to the Justice Department.
Date: March 2, 2016