Anthem argues merger with Cigna would help ACA markets

In Anthem’s response to the U.S. Department of Justice’s antitrust lawsuit seeking to block its proposed acquisition of Cigna, the health insurer argues the deal would help stabilize health insurance exchanges created under the Affordable Care Act and repeated promises that savings from the merger would be passed on to consumers.

The July 26 filing denies almost all of the allegations made in the DOJ’s lawsuit, such as the assertion the merger—which the DOJ labeled as the largest in the history of the healthcare industry—would be anti-competitive and ultimately harm consumers.

“Anthem avers that the acquisition will increase competition and result in cost savings, efficiencies, and other benefits that will make healthcare more affordable and accessible to consumers,” Anthem said in its response to the suit.

The filing went on to argue that overlaps between the two insurers is “geographically limited” and would in fact increase insurance offerings on the ACA exchanges, saying the combined insurer would sell plans in parts of nine states where neither Anthem nor Cigna is currently participating.

On a July 27 conference call discussing the insurer’s latest earnings report, Anthem CEO Joseph Swedish said the company will “run out the litigation as long as it takes.” He added that the company will exercise an option with Cigna to extend the deal’s deadline to April 2017. If the DOJ lawsuit goes to trial, Swedish said he expected it to begin in October.

There are questions about whether the deal will survive that long.

The Wall Street Journal reported in May that “bickering” between the two insurers’ executives was threatening to scuttle the deal. Since the lawsuit was filed, Cigna’s public actions have been noticeably different from its would-be buyer. Its statement reacting to the suit didn’t defend its merits, as Anthem’s own response did, but said “Cigna is currently evaluating its options consistent with its obligations under the agreement,” adding it doesn’t expect the transaction would close in 2016 “if at all.”

Cigna has since announced an expansion of its ACA business for 2017, filing with insurance regulators to offer coverage in Chicago and parts of North Carolina and Virginia.

Aetna hasn’t filed its detailed response to the DOJ’s related lawsuit seeking to block its $37 billion takeover of Humana, but both companies expressed a greater sense of urgency in a joint filing asking for permission to attend any court conference where scheduling has been discussed. Unlike the Anthem-Cigna deal, Aetna-Humana’s merger has a contractual “drop dead date” of December 31, according to Bloomberg.