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Anthem, Cigna face off against US to save $48 billion deal

WASHINGTON — Anthem Inc., Cigna Corp., and the US government offered a federal judge widely divergent views of the impact 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 should be blocked because it will increase the companies’ dominance and cut consumer choice.

Anthem’s attorney, Christopher Curran, responded that the combined company will be able to lower rates paid to health care providers and that those savings will be passed on to employers.

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In the first phase of the trial, the United States 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 by combining they will be able to lower rates.

Those savings don’t count “if the only way you get them is through more market power,” he 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 earlier this year, the Obama administration seized an opportunity to further shape the future of health care after passage of the Affordable Care Act.

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President-elect Donald Trump has said his administration will be more probusiness than his predecessor’s, but he has also said he would block AT&T Inc.’s plan to buy Time Warner Inc. Trump, who is to take office on Jan. 20, said Friday that he would nominate Senator Jeff Sessions to be attorney general. The Alabama Republican doesn’t have a clear track record on antitrust issues, leaving his approach to competition preservation unclear.

The American Medical Association is also opposed to the merger, claiming it will reduce choice for consumers.

Anthem is a member of the Blue Cross and Blue Shield Association and operates under a Blue license in all or parts of 14 states. By combining with Cigna, Anthem’s share of the national-account market in those states would be about 48 percent, according to the government’s presentation.

Anthem said there’s plenty of competition in the market because large companies don’t have to rely only on national networks to provide insurance to employees. They can turn to regional insurers, Curran said. International Business Machines Corp., for example, uses multiple insurers for its employees, he said.

“It’s a menu selection these employers make,” he said.