Within our own 14 states, the cigna brand, the cigna products, may come into our blue cross portfolio within those 14 states. However, in the National Account space it will still continue to compete as cigna, so its a combination of kind of placements in the country that are based on our blue states and our nonblue states where cigna will, in fact, compete. With respect to the best efforts rule that you brought up, we do need to comply with that rule, and we do not need to respond to the rule in terms of how we will comply until after the transaction closes. And then well have two years thereafter to adjust our portfolio, but we do not believe that will be an impediment to the deal nor do we believe that will present any competitive deterioration in the marketplace. Whereas today cigna has every incentive its incentivized naturally to compete as much as possible and fight for as much market share as possible, but boe wont the best efforts rule necessarily limit and cap cignas future competitiveness given that arrangement . Mr. Chairman, we believe it is just the opposite. Our acquisition of cigna will make the cigna brand stronger. Nationally, in terms of the nonblue states where they will compete against all plans. I think there will be a significant upside to the cigna brand in those markets with respect to whether it provides support to National Accounts, large group, or other methods that will engage in the marketplace. Okay. Ive got another question now that i want to ask to both you and to mr. Bertolini. Each of you talked a little bit about how customers, consumers, would benefit from your respective transaction as a result of improved efforts in connection with valuebased health care. Tell me how these benefits would be merger specific. That is, why couldnt those benefits be achieved in the absence of the merger . Thank you for the question, mr. Chairman. Its about, again, capabilities and presence in the marketplace, having a footprint of products that youre able to contract with the provider system. This discussion earlier of living in two worlds, fee for service and valuebased insurance design. The more of the revenue that you can include in the new design, the easier it is for the provider to transition. From our point of view, having that opportunity to provide a broader breadth of products by market where we can engage in a full conversation with the provider about changing their revenue model to a valuebased model is our intent. With respect to our engagement in the marketplace, we believe that there are three core elements. Focus on the consumer, focus on the provider, and then focus on building the value that is then delivered to the consumer. With respect to valuebased payment methodologies and probably can label them alternative payment models, just within the last three years weve built out a valuebased effort that now totals 53 of all of our payments to providers are valuebased. We have an infrastructure that combined with the cigna infrastructure that will accelerate at a fast pace valuebased payments in the marketplace. Value then does go to the consumer. We have 150 acos. We have 780 hospitals that are now affiliated with us in these alternative payment methodologies. With over 100,000 physicians that are participating. Cigna has likewise built a very elegant infrastructure that in alignment with us and engaging in the marketplace, we believe we will deliver tremendous uptake in value that will benefit the consumer. Thank you. Senator franken . Were not going to recess for votes now . I can get through this . Im going to depart. I was just listening to mr. Swedishs answers on the cigna now, which is competing against Blue Cross Blue Shield. Wont be able to. I saw some skepticism about your answers, and i want to make these answers short. Dr. Dafny, did you share with me a little skepticism because i think that all the cigna plans will not be able to compete with the blue plans in many of these markets . Thank you for the question, senator franken. My First Response is with regard to the national plans, the notion that anthem and cigna could continue competing in that segment. Theyre going to be the same entity, so they might have two names, but i dont see how thats competition. With respect to whether the agreements with the blue cross and Blue Shield Association would inhibit the expansion of cigna as a brand, that very much depends on how big they are in the various markets and whether they would exceed the thresholds. And i would say i sure wish i had the data to assess the veracity of the claim that that constraint isnt binding. Im going to continue on because you spoke to that. Im sorry . Ive got to go pretty soon to vote. Okay. Let me try to do this fast. Mr. Slover, i wrote the medical loss ratio provision of aca, which everyone knows requires insurers to pay at least 80 , 85 of their premium dollars on the Actual Health care for large groups. Mlr has saved billions of dollars for consumers. Im just a little worried about a couple things. Dr. Dafny said something that could be repealed. I hope not. Can you talk to how mlr has been saving money for consumers and made competition better in the Insurance Markets . Yes, senator. We are strong supporters of the medical loss ratio requirement. Were very glad its in the law. Its brought tremendous benefits to consumers. As youve indicated, billions of dollars. And it has disciplined insurer spending, but it works only in that one dimension. Its working very well in that one dimension to put a floor on the percentage of premiums that has to go to paying health care and quality improvements. It doesnt address the other ways competition can be affected by mergers. And if we lose the Competition AmongInsurance Companies in the nonprice competition isnt just about price, although price may be the easiest way to measure it. And so we think that for all of the great work that the mlr has done, it works better in conjunction with a competitive marketplace. Absolutely. Mr. Bertolini, mr. Swedish, you both described how savings will be passed along to consumers, so are you saying that you will commit passing these savings on to your policy holders . It is our intention to make our products more affordable, and we commit to continue to drive affordability across the system. And the changing relationship of providers thats not quite an answer to my question. Okay. Do you commit to passing along your savings to your policyholders . Which savings are you referring to, senator . The savings youll have by virtue of being able to do this merger. Well need to do that and more in order to make products more affordable going forward. Thats not quite an answer. Will you commit to passing on the savings to your policyholders . Our savings will be passed along in the price of our product . Mr. Swedish, do you commit to passing along the savings, all of the savings to your policyholders . Were committed to driving affordability for all of our customers. Were committed to balancing the investments that are necessary to improve our products for the benefit of our consumers, and i believe by definition that generates savings that goes to the consumer. Do you commit to pass those savings on to the consumers . Well certainly do so to the extent were providing a very balanced portfolio of offerings to the marketplace that is driven by great value, driven by the desire that the customers want us to address, and again, i do believe that all translates to improved distribution of savings to the consumers. Im out of time. I do think we could have gone quicker if those answers were yes. Okay. Im going to go vote right now. Senator hatch is going to assume the gavel while he does his questioning for the next few minutes. Im going to be very fast. I hope ill be back by the time he finishes. If not, well go into a recess for a few minutes until senator klobuchar and i are back. Senator hatch. Thank you, mr. Chairman. Let me just ask this question to mr. Bertolini and mr. Swedish. Opponents of the merger argue that entry into a commercial Health Insurance market is difficult because it requires an entrant to assemble a broad Provider Network to obtain prices and discounts comparable to leading incumbents. Do you agree with that view . I would like to have your answer from both of you. And if so, why or why not . Senator hatch, our acquisition is a Medicare Advantage combination, so there will be very little impact, if any, on the commercial marketplace. We see no competitive impact related to market entrants. However, there are 400 commercial insurers in the marketplace today. There are new entrants, 75, in the last three years on the Public Exchanges. As they begin to offer more products and services, so we think theres a robust competitive market. There are ten in the overlap markets between anthem and humana and the commercial Public Exchange markets today. Thank you for the question, senator. [ inaudible ]. Appreciate the fact that the relationship with cigna and anthem presents there is no number two, youre looking at the individuals states. We are both in many states. We only overlap in five states. The choices to the consumer in the individual states is incredibly robust. From an average of 40 health plan plans we have witnessed tremendous growth in the number of plans. A lot of Provider HealthCare Networks are offering Health Insurance products to the marketplace. Again, i believe competition is robust. The entry points are many, and it is producing tremendous opportunity for the market to receive products and services for many health plans going forward. Thank you, sir. Mr. Slover . Am i pronouncing that right . Yes. Based on past experience, how likely are enrollees to change plans when premiums go up or benefits are cut . If a post merger etna orran them were degrading services how likely is it they would lose subscribers . Well, there probably is some sticking effect up to a point that consumers are going to stay with who theyve got and employers are going to say with who theyve got, but its important that they have a choice, another place to go, and a place where they can get as good of coverage as they had before or better coverage at a more affordable price and to have those insurers competing against each other to hold each other in check. And so what were concerned about and this is something that the Justice Department is going to have to look at in each one of these markets is how this combination is going to affect that and is going to risk losing that benefit. Could i have you two, mr. Bertolini and mr. Swedish, comment on his comments . Senator, like politics, all health care is local. There are many competitors and a lot of varria bility in each competitive marketplace. The large driver behind our acquisiti acquisition, there are 18 different plan options available to seniors. In nonrural markets and in rural markets there are ten, so we view the ability for lots of choice still available. The government benchmark against which we compete is still dropping every year, and so we see the markets still very competitive. Wall street is investing in new entrants into the marketplace. The plan called oscar, which entered the new york market, a very large market, just received a 2. 5 Million Investment from google to open that marketplace up. Mr. Swedish . I can simply underscore what mr. Bertolini brought out by referencing dr. Ginsburgs paper on page 5. He speaks to the growth in one sector in the industry. He states a recent Health Analysis reports that 15 of the 28 new entrants into Medicare Advantage between 2012 and 2015 are, in fact, health systems, and 37 providersponsored plans offer coverage on the Public Exchanges. I simply want to underscore that there are many new entrants to the marketplace. Oscar being one thats probably more recent and called out quite frequently as an entrant thats having Great Success in the marketplace. So again competition is becoming more robust in every sector of the health plan marketplace. Professor ginsburg, what is the relevant market or markets here . Excuse me, sir . What is the relevant market or markets here . Yes, well, i would say there are two markets that these days are particularly easy to enter and are seeing entrants. One is the individual market as a result of the Public Exchanges, and the other is Medicare Advantage. This is where youre seeing the entry. I dont think youre seeing that much entry in other markets, but as the other witnesses have said, i think those markets are becoming more competitive. Is it the National Market . Is it each state market, or is it some number of smaller Geographic Markets . And should traditional medicare and Medicare Advantage be considered part of the same market or different markets . And whats the right way to define the Health Insurance market, i guess is what im getting down to . Its very challenging. In some markets, markets for individuals, small groups, some of the Large Group Markets, very local markets. Medicare advantage is very local markets. For large selfinsured employers, a lot of that is a National Market. So thats quite distinct. Do you care to comment, professor dafny . I would concur that market definition depends on the Access Channel and the specific customer segment, and it would be for different commercial populations and for Medicare Advantage populations most likely. Okay. Let me get back to you again, mr. Bertolini, mr. Swedish. Mr. Bertolini, the American Hospital association has argued that the aetna humana merger would increase the score for Medicare Advantage by over 200 points. In 19 of 24 highly concentrated markets. Mr. Swedish, the Association Assembly argued that the anthem cigna merger would increase the score for Health Insurance by over 200 points in 600 highly concentrated markets and by over 100 points in another 217 highly concentrated markets. Now you first, mr. Bertolini. But then, mr. Swedish. Do you agree with those calculations, and if not, why not . If those calculations are correct, does that mean the mergers will increase market power . Thank you, senator. Ill point to a comment dr. Ginsburg made earlier. Market concentration is just one measure of looking at potentially anticompetitive issues. Im not an expert on the hh index. I have enough to do in my day job to manage all that i can think about relative to medical loss ratios and the like, but i would say as we look at the markets where aetna and humana compete, we have 18 competitors in nonrural markets and 10 plans offered in rural markets. 18 offered in nonrural. We see plenty of competition and plenty of entrants. Entrants have been more than half Hospital Systems. We view that in the event we get to the point with the department of justice that we need to engage if divestitures, there will be Hospital Systems that want to have an opportunity to enter the Medicare Advantage market. Thank you. Senator, likewise. Im not completely familiar with the analytics that you mentioned. And in particular the Research Results that have been referenced. I would rather respond back to the committee at another time maybe for the record, very soon, and, of course, to the department of justice regarding their assessment of the combination of these two companies. Thats probably the best i can offer at the moment. Thank you. This has been interesting to me. Im supposed to recess until further notice. I think theyll be back shortly from their votes. Well just recess until the senators get back. Were ready to reconvene. Senator klobuchar is next. Thank you very much, mr. Chairman. I talked a little bit about the Health Insurance consolidation, and i know we had some quick answers there from both of you. We have a little more luxury of time now, so if you could, finish up, mr. Swedish. I was asking you, remember, about why you needed the merger to achieve some of these cost goals that you have. Thank you for the followup question. What id like to do is maybe describe to you the various products and services that we do offer in terms of how we segment our business. This is a highly segmented industry that then serves a very focused effort in and around local markets. For instance, we are very active, as is cigna, in the National Marketplace serving large National Accounts. These are very sophisticated, highly educated buyers of Health Care Services typically using consultants who then they rely upon to make the selections for the health plan that will serve them in the National Market space they reside in. Very Competitive Landscape in the National Account marketplace. So specific to your question about why come together, well both be better able to serve that Customer Base of National Accounts that highly desires our support as an Administrative Services only support team to what they need in terms of health plan delivery. Whats fascinating when people as