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Government witnesses testify in 2nd phase of Anthem/Cigna antitrust trial

Government witnesses on Dec. 16 testified that Anthem Inc.'s planned acquisition of Cigna Corp. would reduce competition and harm healthcare providers and patients, Bloomberg News reported.

The testimony came during phase two of an antitrust trial in which the U.S. Department of Justice is challenging the $48 billion merger of the two large health insurers. The trial is now focused on local markets, after the end of testimony on the national impact of the deal.

Frank Gorse, a vice president at urgent care centers operator Patient First, said the deal would force his company to cut services for patients because it would reduce Cigna's rates to Anthem's level, significantly short of Patient First's inflationary cost increases, according to the report.

Henry Lipman, senior vice president for financial strategies at New Hampshire hospital operator LRGHealthcare, testified on behalf of the government that his company's payments were reduced under its latest contract with Anthem. Lipman said his company is laying off staff to cut costs and expects the merger to further reduce revenues. Another government witness, Bo Hawthorne, a benefits consultant at Scott Insurance, said his clients were able to reduce their costs by switching between Anthem and Cigna in contract negotiations.

The government argued that the deal would allow Anthem to increase costs by reducing alternatives for employers, who have benefited from competition between the two insurers. Anthem countered the argument with witness testimony that it is losing business to several rivals in highly competitive local markets.

Anthem's acquisition of its rival will also increase its leverage over doctors and hospitals and allow it to lower reimbursement rates paid to them, the Justice Department said. Anthem argues that the deal would benefit customers because it would allow the two insurers to achieve efficiencies and pass on reduced medical costs to consumers.

The case is one of two antitrust trials in which the Justice Department is suing to prevent consolidation of the biggest health insurers in the U.S. In the other trial, the Justice Department is challenging Aetna Inc.'s planned acquisition of Humana Inc.