US: Anthem-Cigna risks competition says economist

Anthem’s proposed $48 billion merger with Cigna could give the insurer the power to raise prices for employers both in the 14 states where it does business, as well as across the country, according to a witness in the US government’s lawsuit to block the deal.

“The merger will harm competition in the market for national accounts” as well as in states where Anthem operates, said David Dranove, a health-care economics professor at Northwestern University’s Kellogg School of Management in Evanston, Illinois.

Dranove told US District Judge Amy Berman Jackson that the combined company could impose a price increase in the range of five percent to 10 percent without losing business simply because there would be one less option available.

The Justice Department sued in July to block the deal, as well as the union of Aetna and Humana saying they would reduce the number of large, national health care insurance providers, leading to increased costs for their clients. The Anthem-Cigna trial started Nov. 21. The Aetna-Humana case goes to trial Dec. 5 before a different federal judge in Washington.

Full Content: Bloomberg

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