By Brent Kendall
Morningstar.com
3/24/2017
WASHINGTON — A federal appeals court panel on Friday asked tough questions of health insurer Anthem Inc., which is attempting to salvage its proposed $48 billion acquisition of Cigna Corp. after a trial judge blocked the combination as anticompetitive.
The Anthem appeal, which took place in front of a large crowd at the U.S. Court of Appeals for the District of Columbia Circuit, was surprisingly lively — and lengthy — as three judges said the case presented novel and difficult issues.
“We haven’t had a case like this,” Judge Brett Kavanaugh said.
The session was supposed to last for 40 minutes; the judges instead asked questions for about two hours.
Many of those questions focused on Anthem’s arguments that any anticompetitive problems with its purchase of a rival insurer were outweighed by what it said were billions of dollars in cost savings that would result.
That money would be passed along to employers and consumers in the form of lower health care costs, Anthem lawyer Christopher Curran argued. The trial judge who blocked the merger “ignored medical cost savings,” Mr. Curran said. “We believe that was an error.”
The D.C. Circuit judges, however, noted that Anthem’s cost savings would come at the expense of doctors and hospitals, which would face lower reimbursement rates from a combined Anthem-Cigna.