The U.S. Department of Justice argued Anthem's proposed $54 billion absorption of Cigna would create a dominating company that would hurt consumer choice, calling on Anthem CEO Joseph Swedish as a witness to address the argument in Washington, D.C., Monday, reports Bloomberg.
On the antitrust case's first day, government attorney Jon Jacobs said the proposed combination of Indianapolis-based Anthem and Bloomfield, Conn.-based Cigna is the most complex deal in the insurance industry's history, and would impede competition in at least 60 markets. Mr. Jacobs also said U.S. District Judge Amy Berman Jackson should rebuff the insurers' claim that their deal would lower consumers' costs.
Aside from consumer concerns, the government alleged an Anthem executive told Mr. Swedish the proposed deal brings together two insurers with opposing strategies. On one hand, Cigna works with physicians to negotiate rates, while on the other, Anthem "drop[s] the hammer" on provider payments, according to the report.
As witness, Mr. Swedish said the insurer would not "drop the hammer" on providers, calling the phrase "very old school." He said, "We don't live in a discount world anymore."
The judge responded by saying lowering cost was a cornerstone of Anthem's defense, Bloomberg reports. An Anthem attorney had argued the payer's acquisition of Cigna would allow the resulting entity to lower healthcare provider payments and allocate those savings to employers.
The two-phase trial is scheduled to last more than a month, with the first phase focusing on the deal's effects on national employers, and the second phase honing in on its effects on local markets, beginning Dec. 12.