Report says Anthem-Cigna merger would hurt NH most

AMA points to market share of combined company

The proposed $54 billion merger of health insurance giants Anthem and Cigna would hurt competition in New Hampshire more than any other state, according a report released Monday by the American Medical Association.

The proposed merger, announced in July, would enhance the market power of the insurance industry in some 85 metropolitan areas in 13 states, the AMA contends, but the change in concentration would be the largest in the Granite State

The health insurance industry is already heavily concentrated in New Hampshire, topping the threshold of high concentration as measured by the Herfindahl–Hirschman Index (HHI), which is often used by the federal government in investigating at antitrust violations.

In the AMA report, the index is used to measure both small business insurance plans (where Anthem dominates in New Hampshire) as well as self-insured businesses, where Cigna is strong.

Anthem had a 60 percent market share in New Hampshire in 2013, the latest data available, followed by Harvard Pilgrim, at 27 percent, with Cigna third, at 6 percent, according to a recent study conducted for the New Hampshire Insurance Department.

This, however, has changed somewhat in subsequent years, since the Affordable Care Act brought more competition into the state, at least in the sale of individual policies under the health exchange.

Using the HHI, the New Hampshire market measured 2,769 points in 2013, above the 2,500-point threshold used to signify a concentrated market. New Hampshire’s HHI was higher than the 14 others states examined in the AMA report, but below Indiana, Maine and Kentucky.

If the merger were to though, New Hampshire’s HHI would go up 61 percent to 4,452 – the second-highest HHI behind Indiana’s 4,999. But the change caused by the merger – an increase of 1,682 – would be greatest in New Hampshire.

When it comes to local impact, the merger would hurt competition the most in the Rochester-Dover area, the AMA says, with the HHI there increasing 55 percent to 4,354, followed by the Manchester area (up 57 percent to 4,215), the Portsmouth area (up 44 percent to 3,940) and Nashua (up 53 percent to 3,640).

Rural areas aren’t measured, but presumably the lack of competition would be even more severe there.

Efficiency or gouging?

The AMA is asking federal and state regulators to intervene, charging that the proposed merger, as well as a proposed Aetna-Humana merger, will lead to undue concentration.

The insurance industry trade group America's Health Insurance Plans attacked the report for using misleading and inaccurate data.

Local representatives of both industries also held opposing views.

“Without completion, you have price-gouging going forward,” said Dr. Lukas Kolm, a Dover physician who is president of the NH Medical Society. “Crushing your competition, owning your competition is not the right way. People want to create more competition for Anthem; they don’t want less.”

Anthem, however, argued that the merger would be good for consumers.

“The complementary capabilities of Anthem and Cigna will enable us to continue to lead the transition to value-based care that will reduce costs while improving health outcomes,” said Anthem spokesman Colin Manning. “Additionally, it will allow for greater efficiency, thereby enhancing our ability to better manage cost-drivers that can impact affordability.”

Both the House Judiciary Committee and the Senate Judiciary Committee are planning to hold hearings about the merger proposal later this month in Washington. In New Hampshire, the NH Insurance Department is also planning to hold a hearing on the issue.