Anthem throws support behind American Health Care Act as it seeks support for Cigna merger

20 March 2017 1:27pm

13 March 2017. Curtis Eichelberger.

Anthem, which has told a federal court that the new Republican administration might look favorably on its floundering merger with Cigna, is telling legislators that it looks favorably on the Republicans' floundering healthcare plan.

Anthem Chairman Joseph Swedish became one of the first US executives to throw his support behind the American Health Care Act. Writing to the Republican-led House Ways and Means and Energy and Commerce Committees last week, Swedish said, "The American Health Care Act addresses the challenges immediately facing the individual market and will ensure more affordable health plan choices for consumers in the short term".

Anthem's $54.2 billion merger with health insurer Cigna was blocked by US District Judge Amy Berman Jackson last month. The companies are appealing, and Anthem will make oral arguments to the US Court of Appeals for the DC Circuit on March 24 in Washington.

Cigna, meanwhile is ready to call it quits, and sought to terminate the deal. A Delaware judge, however, backed Anthem's request that it be allowed to continue to pursue the merger.

Part of Cigna's argument was that the deal was already effectively dead.

Anthem, however, defended the viability of the deal. In Delaware Chancery Court, the company argued not only that it could still win on appeal, but that the Trump administration might change course and find a way to work with Anthem to allow the deal to be completed.

Transcripts from a court hearing in Wilmington, Delaware, on Feb. 15 show how Anthem's appeal is at least partly designed to buy time to negotiate a settlement with the new administration. Anthem attorney Glenn Kurtz explained Anthem's strategy during the hearing.

"I think it's important for the Court to understand that there are at least two pathways to a closing here," Kurtz said of the merger. "One is through appeal and the other is through resolution with a new Department of Justice.

Anthem's position puts a happier spin on a more somber view expressed by a number of antitrust lawyers. When Trump, as president-elect, publicized meetings with executives from companies going through merger reviews, members of the antitrust bar expressed concerns about the potential for the administration to meddle in antitrust affairs.

Trump's power gives him wide latitude to craft antitrust policy on a case-by-case basis, especially in cases involving the Department of Justice, which isn't an independent agency like the Federal Trade Commission.

The Department of Justice and White House have declined to comment on whether the president or Attorney General Jeff Sessions have met with Anthem to discuss a new deal. Anthem and Cigna aren't discussing the matter publicly, and Anthem declined to talk about Swedish's March 9 letter to the congressional committees.

House Ways and Means Committee Chairman Kevin Brady, however, expressed his appreciation for Anthem's input.

"Anthem understands that Obamacare is failing the American people and that we have to take action to repeal and replace this broken law," he said in a statement. "We're pleased to have their support for our legislation, which takes historic steps to deliver lower costs, greater access, and more options in health care."

Anthem's support of the American Health Care Act runs contrary to positions taken by the American Medical Association, American Hospital Association, the American Association of Retired Persons (AARP) and the American Diabetes Association, which have roundly criticized the bill. The bill has drawn vocal criticism from across the political spectrum as Democrats have argued that it would deny healthcare to millions, while conservative Republicans object to the bill's subsidies.

Even the insurance industry has been cautious.

America's Health Insurance Plans (AHIP) said while there are positives in the bill, changes to Medicaid "could result in unnecessary disruptions in the coverage and care beneficiaries depend on."

BlueCross BlueShield Association supports portions of the bill, but recommends changes to key provisions, including tying tax credits to income levels in order to make insurance more affordable to older and lower-income Americans.

Although antitrust lawyers have expressed misgivings about intervention from the president on antitrust matters, some concede that it would be malpractice to ignore an opportunity to gain approval for a deal. Whether or not Anthem's support of AHCA is politically opportunistic, the company has clearly considered the opportunity created by the change in administrations.

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