Anthem Inc., Cigna Corp. and the U.S. government offered a federal judge widely divergent views of the effect their proposed $48 billion combination will have on health-insurance markets.
Justice Department lawyer Jon Jacobs said at the start of an antitrust trial in Washington that the biggest merger in the history of the American health-insurance industry will increase the companies' dominance and cut consumer choice.
Anthem attorney Christopher Curran responded that the combined company will be able to lower rates to health-care providers, who will pass on the savings to consumers. His client's chief executive officer, Joseph Swedish, who is slated to testify at the trial, sat a few feet away.
It will be up to U.S. District Judge Amy Berman Jackson to determine which side has the most convincing evidence during a two-part trial that's scheduled to span more than a month. In the first phase of the trial, the U.S. will attempt to prove that the combined company will hurt large national employers. In the second phase, set to start Dec. 12, the trial will focus on the proposed tie-up's effect on local markets.
The merger is the most complex in the industry's history and will harm consumers in at least 60 markets, Jacobs said, adding the judge should reject the companies' argument that they will be able to negotiate lower rates that will be passed on to consumers.
Those savings "don't count if the only way you get them is through more market power," Jacobs said. "The more concentrated the market, the more likely you'll have higher prices, lower quality, reduced consumer choice and less innovation."
The Anthem-Cigna lawsuit is one of two federal health-care antitrust cases going to trial in the waning days of the Obama administration, which is trying to prevent the industry from shrinking. The second case, against the $38 billion tie-up of Aetna Inc. and Humana Inc., opens before another judge in Washington on Dec. 5.
By challenging the deals this year, President Obama's administration seized an opportunity to further shape the future of health care after passage of the Affordable Care Act.
The American Medical Association is also opposed to the merger, claiming it will reduce choice for consumers.
"Allowing Anthem and Cigna to create a health insurance Goliath would compromise physicians' ability to advocate for their patients," AMA president Andrew Gurman said. "Competition and choice hang in balance."