Anthem, Cigna face off against U.S. to save $48 billion deal

Anthem, Cigna and the U.S. government offered widely divergent views to a federal judge 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, D.C., that the biggest merger in the history of the American health-insurance industry will increase the companies' dominance and cut consumer choice.

Anthem owns Amerigroup, one of the three managed-care organizations that handles Iowa's Medicaid program.

Anthem's 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.

It'll 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 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 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.

Aetna owns Coventry Health, which sells coverage on the Affordable Care Act's Health Insurance Exchange in Iowa. The American Medical Association also opposes 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,” American Medical Assocation President Andrew Gurman said in an emailed statement as the trial started. 'Competition and choice hang in balance.”