Markets where an Anthem-Cigna merger warrants antitrust scrutiny

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Markets where an Anthem-Cigna merger warrants antitrust scrutiny Analysis of data from the 2016 update to the AMA Competition in health insurance: A comprehensive study of U.S.

1 Markets where an Anthem-Cigna merger warrants antitrust scrutiny Analysis of data from the 2016 update to the AMA Competition in health insurance: A comprehensive study of U.S. markets Health Policy Group American Medical Association Introduction This analysis provides the commercial market share and concentration (HHI) effects of the proposed merger between Anthem (WellPoint) and Cigna. Data used in this analysis are from the 2016 update to the AMA s Competition in health insurance study (i.e., 2014 HealthLeaders-InterStudy data). Using the 2010 Department of Justice (DOJ)/Federal Trade Commission (FTC) Horizontal Merger Guidelines, it presents the state and metropolitan statistical area () level markets where the merger would raise competitive concerns based on how the Guidelines classify markets. Under the DOJ/FTC merger guidelines: s with HHI less than 1500 are unconcentrated; mergers are unlikely to raise competitive concerns. s with HHI between 1500 and 2500 are moderately concentrated; mergers that increase the HHI by more than 100 points potentially raise significant competitive concerns and often warrant scrutiny. s with an HHI of more than 2500 are highly concentrated; mergers that increase the HHI by 100 to 200 points potentially raise significant competitive concerns and often warrant scrutiny, and those that increase it by more than 200 points will be presumed likely to enhance market power. The following set of tables report those markets pre- and post-merger HHIs and the change in HHIs that would result from the proposed merger. The results are presented for commercial, combined (HMO+PPO+POS+EXCH) product markets as well as for HMO, PPO, POS and exchanges separately. For each product market, they are reported at the state-level and then by. The results are presented in a series of eight tables: Tables 1 and 2 (combined (HMO+PPO+POS+EXCH) markets); Table 3 (HMO markets); Tables 4 and 5 (PPO markets); Tables 6 and 7 (POS markets); and Table 8 (exchanges). For all plan types, we classify markets according to whether the merger will be presumed likely to enhance market power (reported in the top panels of the tables) or whether it potentially raises significant competitive concerns and often warrants scrutiny (reported in the bottom panels). Results for combined (HMO+PPO+POS+EXCH) product markets State-level results The results reported in the top panel of Table 1 indicate that an Anthem-Cigna merger would be presumed likely to enhance market power in the commercial, combined (HMO+PPO+POS+EXCH) markets in 10 of the 14 states (NH, IN, CT, ME, GA, VA, CO, MO, NV and KY) in which Anthem is licensed to provide commercial coverage. The results presented in the bottom panel of Table 1 indicate that an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny in the other four states where Anthem operates (OH, CA, NY and WI). 1

2 Although Table 1 shows that the merger would cause important changes in the HHI (concentration), we note that in Kentucky and Wisconsin, Cigna s pre-merger market shares were 4 percent and 3 percent respectively. The significant increases in the HHI would be the result of Anthem s existing high shares in those states. -level results The results reported in Table 2 (top panel) indicate that an Anthem-Cigna merger would be presumed likely to enhance market power in the commercial, combined (HMO+PPO+POS+EXCH) markets in s located in 13 of the 14 states (CA, CO, CT, GA, IN, KY, ME, MO, NH, NV, NY, OH and VA) in which Anthem is licensed to provide commercial coverage. Finally, the results of the analysis in Table 2 (bottom panel) indicate that an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny in s located in CA, CT, KY, MO, NH, NV, NY, OH, VA and WI. Results by product market State-level results Table 4 (top panel) shows the 12 states (NH, IN, CO, GA, CT, VA, ME, CA, NV, MO, KY and OH) in which the merger will be presumed likely to enhance market power in the PPO market. Table 6 shows the three states (CA, NH and VA) in which the merger will be presumed likely to enhance market power in the POS market. Table 4 (bottom panel) shows that in two additional states (WI and NY), the merger potentially raises significant competitive concerns and often warrants scrutiny in the PPO market. -level results Turning to the results by, Table 3 shows that in one (Chattanooga, TN-GA), the proposed Anthem-Cigna merger will be presumed likely to enhance market power in the HMO market. 1 Table 5 (top panel) shows the s, which are located across all 14 Anthem states (CA, CO, CT, GA, IN, KY, ME, MO, NH, NV, NY, OH, VA and WI), where the merger is presumed likely to enhance market power in the PPO market. Table 7 (top panel) shows that s meeting those criteria in the POS market are located in five states (CA, GA, IN, NH and VA). Table 5 (bottom panel) shows the s (in MO, NH, NY and WI) where the merger potentially raises significant competitive concerns and often warrants scrutiny in the PPO market, Table 7 (bottom panel) shows s classified in that way (in CA and CT) for the POS market and Table 8 shows the relevant (Chattanooga, TN-GA) for the exchanges. It is uncertain, however, whether each of the product markets would be considered separate antitrust markets (i.e., not clear they are substitutes for each other). We also note that although all -level results show that the merger would cause important changes in the HHI (concentration), in some s Cigna s pre-merger shares were small so that the change in the HHI was not very large. For example, that would generally be the case in combined (HMO+PPO+POS+EXCH) and PPO markets in California and Kentucky s. The significant increase in the HHI would be the result of Anthem s existing high shares in those s. 1. We found no significant competitive effects at the state level for HMO markets and exchanges American Medical Association. All rights reserved :PDF:9/16:JT 2

3 Combined (HMO+PPO+POS+EXCH) markets Table 1 State States where an Anthem-Cigna merger will be presumed likely to enhance market power Combined market HHI HHI New Hampshire Indiana Connecticut Maine Georgia Virginia Colorado Missouri Nevada Kentucky States where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny Ohio California New York Wisconsin Table 2 s where an Anthem-Cigna merger will be presumed likely to enhance market power California Combined market HHI HHI Santa Cruz-Watsonville, CA Salinas, CA Santa Barbara-Santa Maria, CA Visalia-Porterville, CA Oxnard-Thousand Oaks-Ventura, CA Bakersfield, CA El Centro, CA Merced, CA Hanford-Corcoran, CA Modesto, CA Colorado Grand Junction, CO Fort Collins-Loveland, CO Greeley, CO Pueblo, CO Colorado Springs, CO Boulder, CO Denver-Aurora, CO

4 Table 2 (continued) Connecticut Combined market HHI HHI Hartford-West Hartford-East Hartford, CT Waterbury, CT New Haven-Milford, CT Bridgeport-Stamford-Norwalk, CT Danbury, CT Norwich-New London-Westerly, CT-RI Georgia Dalton, GA Rome, GA Savannah, GA Valdosta, GA Albany, GA Columbus, GA-AL Brunswick, GA Hinesville-Fort Stewart, GA Gainesville, GA Athens-Clarke County, GA Atlanta-Sandy Springs-Marietta, GA Augusta-Richmond County, GA-SC Warner Robins, GA Chattanooga, TN-GA Macon, GA Indiana Indianapolis, IN Terre Haute, IN Gary, IN Evansville, IN-KY Anderson, IN Kokomo, IN Michigan City-La Porte, IN Fort Wayne, IN Lafayette, IN Elkhart-Goshen, IN Muncie, IN South Bend-Mishawaka, IN-MI Bloomington, IN Kentucky Bowling Green, KY Owensboro, KY Clarksville, TN-KY Louisville, KY-IN Elizabethtown, KY Lexington-Fayette, KY

5 Table 2 (continued) Maine Combined market HHI HHI Bangor, ME Lewiston-Auburn, ME Portland-South Portland, ME Missouri St. Louis, MO-IL Joplin, MO Jefferson City, MO Springfield, MO Kansas City, MO-KS Columbus, MO New Hampshire Rochester-Dover, NH Manchester, NH Nashua, NH-MA Portsmouth, NH-ME Nevada Carson City, NV Las Vegas-Paradise, NV New York Suffolk County-Nassau County, NY Ohio Parkersburg-Marietta-Vienna, WV-OH Weirton-Steubenville, WV-OH Cincinnati-Middletown, OH-KY-IN Columbus, OH Sandusky, OH Lima, OH Dayton, OH Mansfield, OH Virginia Richmond, VA Winchester, VA-WV Lynchburg, VA Blacksburg-Christiansburg-Radford, VA Kingsport-Bristol, TN-VA Roanoke, VA Virginia Beach-Norfolk-Newport News, VA-NC Danville, VA Harrisonburg, VA Charlottesville, VA s where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny California Santa Ana-Anaheim-Irvine, CA San Jose-Sunnyvale-Santa Clara, CA Los Angeles-Long Beach-Glendale, CA

6 Table 2 (continued) Combined market HHI HHI San Diego-Carlsbad-San Marcos, CA San Francisco-San Mateo-Redwood City, CA Riverside-San Bernardino-Ontario, CA Oakland-Fremont-Hayward, CA Stockton, CA Sacramento-Arden-Arcade-Roseville, CA Connecticut Springfield, MA-CT Kentucky Huntington-Ashland, WV-KY-OH Missouri Fayetteville-Springdale-Rogers, AR-MO St. Joseph, MO-KS New Hampshire Haverhill-Newburyport-Amesbury Town, MA-NH Lawrence-Methuen-Salem, MA-NH Nevada Reno-Sparks, NV New York New York-White Plains-Wayne, NY-NJ Poughkeepsie-Newburgh-Middletown, NY Glens Falls, NY Kingston, NY Ohio Wheeling, WV-OH Youngstown-Warren-Boardman, OH-PA Canton-Massillon, OH Akron, OH Springfield, OH Cleveland-Elyria-Mentor, OH Toledo, OH Virginia Washington-Arlington-Alexandria, DC-VA-MD-WV Wisconsin Racine, WI Milwaukee-Waukesha-West Allis, WI

7 HMO markets Table 3 State HMO HHI where an Anthem-Cigna merger will be presumed likely to enhance market power Georgia HMO HHI Chattanooga, TN-GA PPO markets Table 4 State States where an Anthem-Cigna merger will be presumed likely to enhance market power New Hampshire Indiana Colorado Georgia Connecticut Virginia Maine California Nevada Missouri Kentucky Ohio States where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny Wisconsin New York Table 5 s where an Anthem-Cigna merger will be presumed likely to enhance market power California San Jose-Sunnyvale-Santa Clara, CA Santa Cruz-Watsonville, CA San Diego-Carlsbad-San Marcos, CA Los Angeles-Long Beach-Glendale, CA Santa Ana-Anaheim-Irvine, CA Oakland-Fremont-Hayward, CA Riverside-San Bernardino-Ontario, CA

8 Table 5 (continued) San Francisco-San Mateo-Redwood City, CA Vallejo-Fairfield, CA Sacramento-Arden-Arcade-Roseville, CA Stockton, CA Bakersfield, CA Oxnard-Thousand Oaks-Ventura, CA Napa, CA Modesto, CA Visalia-Porterville, CA Santa Rosa-Petaluma, CA Salinas, CA Santa Barbara-Santa Maria, CA San Luis Obispo-Paso Robles, CA Yuba City-Marysville, CA Madera, CA Fresno, CA Hanford-Corcoran, CA El Centro, CA Merced, CA Redding, CA Colorado Pueblo, CO Greeley, CO Fort Collins-Loveland, CO Grand Junction, CO Boulder, CO Colorado Springs, CO Denver-Aurora, CO Connecticut Hartford-West Hartford-East Hartford, CT Waterbury, CT New Haven-Milford, CT Danbury, CT Bridgeport-Stamford-Norwalk, CT Norwich-New London-Westerly, CT-RI Springfield, MA-CT Worcester, MA-CT Georgia Dalton, GA Rome, GA Savannah, GA Valdosta, GA Brunswick, GA Athens-Clarke County, GA Albany, GA Atlanta-Sandy Springs-Marietta, GA

9 Table 5 (continued) Gainesville, GA Columbus, GA-AL Hinesville-Fort Stewart, GA Macon, GA Warner Robins, GA Augusta-Richmond County, GA-SC Chattanooga, TN-GA Indiana Indianapolis, IN Gary, IN Terre Haute, IN Kokomo, IN Michigan City-La Porte, IN Anderson, IN Evansville, IN-KY Fort Wayne, IN Lafayette, IN Muncie, IN Elkhart-Goshen, IN Columbus, IN South Bend-Mishawaka, IN-MI Bloomington, IN Kentucky Bowling Green, KY Owensboro, KY Clarksville, TN-KY Louisville, KY-IN Elizabethtown, KY Hungtington-Ashland, WV-KY-OH Lexington-Fayette, KY Maine Bangor, ME Lewiston-Auburn, ME Portland-South Portland, ME Missouri St. Louis, MO-IL Joplin, MO Jefferson City, MO Fayetteville-Springdale-Rogers, AR-MO Springfield, MO Kansas, City, MO-KS Columbia, MO New Hampshire Rochester-Dover, NH Manchester, NH Nashua, NH-MA

10 Table 5 (continued) Portsmouth, NH-MA Haverhill-Newburyport-Amesbury Town, MA-NH Lawrence-Methuen-Salem, MA-NH Nevada Reno-Sparks, NV Carson City, NV Las Vegas-Paradise, NV New York New York-White Plains-Wayne, NY-NJ Suffolk County-Nassau County, NY Ohio Parkersburg-Marietta-Vienna, WV-OH Cincinnati-Middletown, OH-KY-IN Dayton, OH Columbus, OH Weirton-Steubenville, WV-OH Springfield, OH Wheeling, WV-OH Canton-Massillon, OH Sandusky, OH Lima, OH Youngstown-Warren-Boardman, OH-PA Toledo, OH Akron, OH Cleveland-Elyria-Mentor, OH Mansfield, OH Virginia Richmond, VA Lynchburg, VA Winchester, VA-WV Virginia Beach-Norfolk-Newport News, VA-NC Washington-Arlington-Alexandria, DC-VA-MD-WV Blacksburg-Christiansburg-Radford, VA Roanoke, VA Danville, VA Kingsport-Bristol, TN-VA Harrisonburg, VA Charlottesville, VA Wisconsin Racine, WI Wausau, WI Eau Claire, WI Milwaukee-Waukesha-West Allis, WI Sheboygan, WI s where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny Missouri St. Joseph, MO-KS

11 Table 5 (continued) New Hampshire Lowell-Billerica-Chelmsford, MA-NH Boston-Cambridge-Quincy, MA-NH New York Poughkeepsie-Newburgh-Middletown, NY Kingston, NY Glens Falls, NY Wisconsin Green Bay, WI Fond du Lac, WI Appleton, WI Janesville, WI Oshkosh-Neenah, WI Madison, WI La Crosse, WI-MN POS markets Table 6 State POS HHI States where an Anthem-Cigna merger will be presumed likely to enhance market power POS HHI California New Hampshire Virginia Table 7 POS HHI s where an Anthem-Cigna merger will be presumed likely to enhance market power California POS HHI Santa Ana-Anaheim-Irvine, CA Los Angeles-Long Beach-Glendale, CA Santa Barbara-Santa Maria, CA Riverside-San Bernardino-Ontario, CA San Diego-Carlsbad-San Marcos, CA Oxnard-Thousand Oaks-Ventura, CA San Francisco-San Mateo-Redwood City, CA Georgia Chattanooga, TN-GA Indiana Kokomo, IN

12 Table 7 (continued) POS HHI s where an Anthem-Cigna merger will be presumed likely to enhance market power New Hampshire POS HHI Rochester-Dover, NH Manchester, NH Virginia Winchester, VA-WV Harrisonburg, VA Richmond, VA s where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny California Oakland-Fremont-Hayward, CA Sacramento-Arden-Arcade-Roseville, CA Vallejo-Fairfield, CA Connecticut Hartford-West Hartford-East Hartford, CT Exchanges Table 8 State EXCH HHI EXCH HHI where an Anthem-Cigna merger potentially raises significant competitive concerns and often warrants scrutiny Georgia Chattanooga, TN-GA

Markets where an Anthem-Cigna merger warrants antitrust scrutiny

Markets where an Anthem-Cigna merger warrants antitrust scrutiny Analysis of data from the 2015 update to Competition in Health Insurance: A comprehensive study of U.S. markets Health Policy Group American