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Bigger May Be Better for Health Insurers, but Doubts Remain for Consumers

Published on August 3, 2015 by in News

the-new-york-times-logoBy: Reed Abelson

08/02/2015

The New York Times

Bigger May Be Better for Health Insurers, but Doubts Remain for Consumers – The New York Times

Deals among the nation’s largest health insurers in recent weeks have been almost head-spinning. But whatever the details, if the combinations are finalized, the result will be an industry dominated by three colossal insurers.

Consumer advocates, policy experts and former regulators say that what may be good for the insurers may not be good for consumers, especially in the wake of a similar frenzy of deal-making among hospitals and doctors’ groups.

“The consolidation in both of these industries has been shown to have an adverse impact on consumers,” said Leemore S. Dafny, a former official at the Federal Trade Commission who is now a professor at Northwestern University’s Kellogg School of Management.

Anthem, which operates for-profit Blue Cross plans in 14 states, merging with Cigna, another large for-profit carrier, along with the planned deal for Aetna to join Humana, a smaller rival known for its private Medicare plans, would create two behemoths.

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Anthem-Cigna Deal is Bad For Doctors on Obamacare Networks

Published on July 31, 2015 by in News

Wall Street National

News that Anthem (ANTM) will buy Cigna (CI) for $54 billion– a deal that closely follows the proposed merger of Aetna (AET) and Humana (HUM) — will intensify regulators’ focus on antitrust issues in the health insurance industry.

Because Anthem’s proposed acquisition of Cigna creates the nation’s largest health insurer with 53 million customers, it’s already being met with a healthy dose of criticism from doctors and hospitals who say insurers are already squeezing them.

In particular, doctors and hospitals say insurers are narrowing their networks for customers who buy coverage on public exchanges under the Affordable Care Act. Though insurers say narrow provider lists allow them to keep costs low and ensure high quality doctors are on the menu of preferred providers and bad physicians are not, providers say they will be in greater danger of being shut out of a network if consumer choices dwindle.

“One of the main goals of the Affordable Care Act was to restore competition in the health insurance sector,” said David Balto, a former policy director at the Federal Trade Commission who is now in private practice in Washington. “This consolidation will reverse these gains of the Affordable Care Act.”

The deal would reduce the number of publicly-traded health insurance companies from five to three, assuming Aetna’s $37 billion purchase of Humana is approved. UnitedHealth Group (UNH) is currently the nation’s largest health insurer.

In Anthem’s case, the plan already is a defendant in a major antitrust lawsuit against Blue Cross and Blue Shield plans that has been consolidated into a class action wending its way through a federal court in Alabama. Anthem operates most of its commercial health insurance business under the Anthem Blue Cross Blue Shield brand.

The suit accuses the Blues plans of conspiring to fix what they pay doctors and other medical-care providers across the country. The Blues plans have denied the allegations.

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Anthem-Cigna Deal is Bad For Doctors on Obamacare Networks

Published on July 31, 2015 by in News

Great Today News.com

07/25/15

Information that Anthem Anthem (ANTM) will buy Cigna Cigna (CI) for $54 billion– a deal that carefully follows the proposed merger of Aetna Aetna (AET) and HumanaHumana (HUM) — will intensify regulators’ center of attention on antitrust issues in the Well Being insurance coverage business.

As A Result Of Anthem’s proposed acquisition of Cigna creates the nation’s largest Well Being insurer with Fifty Three million buyers, it’s already being met with a healthy dose of criticism from Medical Doctors and hospitals who say insurers are already squeezing them.

Particularly, Medical Doctors and hospitals say insurers are narrowing their networks for patrons who purchase coverage on public exchanges beneath the Affordable Care Act. Though insurers say slender provider lists enable them to keep costs low and make sure that top of the range Doctors are on the menu of most well-liked providers and Dangerous physicians are not, suppliers say they’re going to be in better danger of being shut out of a Community if client picks dwindle.

“One Of The major targets of the Reasonably Priced Care Act Was to restore competition within the health insurance sector,” mentioned David Balto, a former policy director on the Federal Exchange Fee who’s now in private follow in Washington. “This consolidation will reverse these beneficial properties of the Reasonably Priced Care Act.”

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Anthem Agrees to Buy Cigna for $48.4 Billion

Published on July 24, 2015 by in News

Deal, which needs regulatory approval, would help reshape health insurance industry

wsjBy: Dana Mattioli, Liz Hoffman and Chelsey Dulaney

Wall Street Journal

07/24/2015

Anthem Inc. agreed to buy Cigna Corp. for $48.4 billion in a transaction that, along with a previously proposed combination of rivals, could reshape the U.S. health-insurance industry.

The deal, which follows months of speculation and at-times contentious talks, combines the second- and fifth-largest health insurers by revenue and merges two companies with a huge footprint in commercial insurance, the type of coverage provided to employers and consumers.

The merged company is projected to have around $115 billion in annual revenue and cover about 53.2 million people. The deal and its price was first reported by The Wall Street Journal earlier this week.

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Anthem Nears Deal to Buy Cigna for $48 Billion

Published on July 23, 2015 by in News

By: Dana Mattioli, Liz Hoffman and Anna Wilde Mathewswsj

July 22, 2015

The Wall Street Journal

Anthem Inc. is nearing a deal to buy Cigna Corp. for more than $48 billion in a transaction that along with a previously proposed combination of rivals would shrink the five largest U.S. health insurers to just three.

Anthem, based in Indianapolis, is expected to pay about $188 a share for Cigna, of Bloomfield, Conn., according to people familiar with the matter. A deal between the two companies could be announced as soon as Thursday afternoon, one of the people said. The agreement hasn’t been signed, and it is possible that the timing could be delayed or deal terms changed.

The tie-up of Anthem and Cigna would accelerate the rapid-fire reconfiguration at the top of the U.S. managed-care industry. The biggest companies are seeking more cost efficiency and scale as the health-care landscape changes because of the Affordable Care Act and other factors.

The expected deal follows by about three weeks Aetna Inc.’s agreement to buy Humana Inc. for $34 billion. In a sign of the takeover frenzy among big health insurers, Cigna also vied for Humana but failed to arrange a cash-heavy offer that Humana had requested, people familiar with the matter said.

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Oxendine lawsuit says Blue Cross overcharges for insurance

Published on July 22, 2015 by in News

LogoAtlantaJournalConstitutionBy: James Salzer

The Atlanta Journal-Constitution

07/21/2015

Suit alleges: Blue Cross overcharges customers, underpays doctors | www.myajc.com

Blue Cross and Blue Shield of Georgia has overcharged customers for health insurance while at the same time cutting payments to doctors outside of their coverage “network,” according to a lawsuit filed this week that seeks class-action status.

Former Georgia Insurance Commissioner John Oxendine filed the lawsuit on behalf of 11 surgical centers, their patients and a claims filing service. It argues that the state’s largest health insurer cut payments to doctors but continued charging consumers a premium rate as if they were still making the higher provider payments.

Oxendine, who said hundreds of millions of dollars may be at stake, has also asked his successor to investigate.

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Blue Shield faces more heat over nonprofit status, $1.2-billion deal

Published on July 13, 2015 by in News

by: Chad Terhunela times logo
LA Times

Health insurance giant Blue Shield of California is facing more questions over its loss of tax-exempt status as it tries to win state approval of a $1.2-billion acquisition..

A former Blue Shield executive is accusing the San Francisco insurer of giving contradictory answers to state officials about its corporate structure. And consumer advocates are calling on Blue Shield to disclose details of a state audit that examined the company’s taxpayer subsidy.

These issues are likely to dominate a hearing Monday in Sacramento held by the California Department of Managed Health Care.

Regulators will hear from Blue Shield and the public about the company’s plans to spend about a quarter of its $4.2 billion in financial reserves to acquire Care1st, a Medicaid insurer based in Monterey Park.

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Health Insurance Companies Seek Big Rate Increase for 2016

Published on July 10, 2015 by in News

the-new-york-times-logoBy: Robert Pear

July 3, 2015

NY Times

WASHINGTON — Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

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California tax officials blast Blue Shield in audit

Published on July 8, 2015 by in News

By: Chad Terhune

LA Timesla times logo

July 5, 2015

In a scathing audit, state tax officials slammed nonprofit health insurer Blue Shield of California for stockpiling “extraordinarily high surpluses” — more than $4 billion — and for failing to offer more affordable coverage or other public benefits.

The California Franchise Tax Board cited those reasons, among others, for revoking Blue Shield’s state tax exemption last year, according to documents related to the audit that were reviewed by The Times. These details have remained secret until now because the insurer and tax board have refused to make public the audit and related records.

Blue Shield’s operations are indistinguishable from those of its for-profit healthcare competitors, the auditors found, and it should be stripped of the tax break it has enjoyed since its founding in 1939. The insurance giant does not advance social welfare, the key test for preserving its tax exemption, according to the records.

“Blue Shield is not operating exclusively for the promotion of civic betterment or social welfare,” tax board officials Christie Maddox and Eddie Murillo-Corona wrote to the insurer in a 16-page report sent June 3, 2014.

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With Merging of Insurers, Questions for Patients About Costs and Innovation

Published on July 6, 2015 by in News

the-new-york-times-logoBy Reed Abelson

July 5, 2015

New York Times

The nation’s five largest health insurance companies are circling one another like hungry lions closing in on prey.

On Friday, Aetna said it would acquire its smaller rival Humana to create a company with combined revenues of $115 billion this year. Anthem is stalking Cigna. UnitedHealth Group, now the largest of the five, is looking at its options. At the end of the maneuverings, three national behemoths are likely to emerge.

There is also a scramble among the smaller insurers. On Thursday, Centene, which specializes in offering Medicaid coverage, said it planned to buy Health Net, a for-profit insurer with headquarters in Los Angeles.

As insurers grow larger, will consumers benefit from the companies’ ability to bargain with hospitals and doctors for lower prices? Will diminishing competition translate to fewer choices of plans? And what effect will mergers have on innovation in health care?

The answers depend largely on how successfully the other insurers, particularly those that were created or attracted by the Affordable Care Act, can compete with these much larger companies.

“All politics are local,” the saying goes, and it is similarly so with insurance companies.

The big (and getting bigger) for-profit companies — which make most of their revenue from employer and Medicare and Medicaid plans — still face significant competition from the regional or state-based nonprofit Blue Cross and Blue Shield plans, particularly in the market for employer-based coverage.

“What people miss is the regional strength of regional Blue Cross plans,” said Paul H. Keckley, the managing director for the Navigant Center for Healthcare Research and Policy Analysis.

Blue Cross Blue Shield plans, including the for-profit versions owned by Anthem in 14 states, have traditionally dominated the markets for individuals and employers. In more than 30 states, a nonprofit Blue Cross sells the most policies to large employers, with almost a dozen capturing three-quarters of the market, according to 2013 data from the Kaiser Family Foundation, the latest information it has compiled.

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