Your Captured Government at Work: Conn. Gov. Malloy Met With Cigna and Anthem CEOs During Merger Review

by Gaius Publius

Cigna and Anthem are health insurance giants that want to merge. Cigna is Connecticut-based (the "C" in Cigna stands for "Connecticut") and pulls in over $1.6 billion in revenue. Its 2012 total assets topped $50 billion.

Anthem, Inc. used to be known as Wellpoint, and if you click the link, you'll see that it too is a player. Anthem pulls in over $2 billion annually and its 2012 assets also topped $50 billion. Both companies truly are giants in the health insurance industry. Connecticut is an insurance state, so as you can imagine, the industry controls most politicians (because, "jobs," about which see below.)

Dan Malloy is governor of Connecticut, current chair of the Democratic Governors' Association (DGA) and former co-chair of the Democratic Convention in Philadelphia. Malloy is a mixed bag as governor, supporting some reasonably advanced progressive policies (for example, marijuana reform, opposition to capital punishment) and some not-so-progressive policies ("shared sacrifice" and "union concessions" during budget negotiations).

Malloy also has ethics issues, especially involving the insurance industry:

Connecticut’s Ethics Board is debating whether to launch an investigation into Malloy’s administration. Under Malloy’s watch, one of the largest health insurance mergers in United States history—a $48 billion deal—could potentially increase premiums and reduce health care coverage for 53 million people across the country.

According to the Norwich Bulletin, “When the deal between Connecticut-based Cigna and Anthem Blue Cross Blue Shield was being negotiated in early 2015, Malloy appointed Katharine Wade as the state insurance commissioner. Wade, a former lobbyist for Cigna with a handful of family ties to the company and a firm that lobbies for it, appointed a deputy and an agency counsel who had worked for Cigna.”

Did I mention Malloy was also co-chair of the Democratic Convention in Philadelphia. You don't get to run an operation like that if you're not deeply in favor with those who really run all operations like that — in this case, the money-soaked mainstream of the modern Democratic Party.

The Cigna-Anthem Merger

In 2015 Anthem announced it wanted to acquire Cigna:

In June 2015, U.S. health insurer Anthem Inc. announced an offer to acquire Cigna for more than $47 billion in cash and stock.^[13] Anthem confirmed it had reached a deal to buy Cigna on July 24, 2015.^[14] On 21 July 2016 the US Justice Department filed an antitrust suit to block the proposed merger.^[15]

Part of the problem the Justice Department has with this merger — it will combine the number 2 and number 5 insurance providers — is that Humana and Aetna also want to merge, in a deal that will combine the number 3 and number 4 providers as well. (And for good measure, there are some stories that United Health may have been interested in Aetna.) No good, for consumers, can come from any of this.

David Sirota at IBT (my emphasis throughout):

Citing unnamed sources, Bloomberg and Reuters both reported that Justice Department officials are positioned to file lawsuits to halt Anthem’s multibillion-dollar acquisition of Cigna, as well as a separate merger between Aetna and Humana. The mergers would create the largest private health insurance companies in American history, and reduce the total number of major insurers to just three — a situation that groups representing physicians and consumers said could raise premiums and limit medical care for tens of millions of consumers across the country. The companies have argued that the mergers would create cost-saving efficiencies that would benefit their customers.

So faced with Justice Department opposition, the Cigna-Anthem merger is under multistate national review. Who's leading that review? The Connecticut insurance commissioner and a Malloy appointee:

Connecticut Insurance Commissioner Katharine Wade, a former Cigna lobbyist [runs the] agency ... leading the national multistate review of the transaction.

Turns out Malloy not only seemed to favor the merger — by appointing a Cigna lobbyist as his state's insurance commissioner while the merger was being negotiated. He also personally met with Cigna and Anthem execs during the same time.

Sirota again:

Money In Politics: Connecticut Gov. Malloy Met With Cigna And Anthem CEOs During Merger Review

Facing criticism over his decision to appoint a former Cigna lobbyist to a position regulating Cigna's controversial merger, Connecticut Governor Dan Malloy has sought to distance himself from the merger review. The regulator in question, Katharine Wade, has said she followed all applicable conflict-of-interest rules. But newly unearthed documents detail Malloy's meetings with company officials and with Wade — and also raise new questions about Wade's financial connections to Cigna.

The emails were released to International Business Times in response to a series of open records requests amid a state ethics probe that has helped throw the colossal Cigna-Anthem deal into turmoil. Connecticut has been leading the multistate regulatory review of the deal, which physicians and consumer groups say could raise healthcare premiums for up to 53 million Americans across the country....

One set of documents shows that the governor met with Anthem CEO Joseph Swedish on August 28, 2015. That was two days after Anthem and Cigna executives met with Wade’s agency specifically about Connecticut’s merger review, and the same day Anthem donated $25,000 to the Democratic Governors Association, which backed Malloy’s closely contested election campaigns. At the time, Malloy was already gearing up to lead the DGA in 2016.

Emails previously obtained by IBT show that Malloy spoke with [Anthem CEO Joseph] Swedish and Cigna CEO David Cordani the night before the merger was announced. They also show that Malloy’s top economic development official told Cordani the governor’s administration would help Cigna if the company pursued the merger. Calendar items just obtained by IBT show Malloy later met with Cordani in the governor’s office in June of 2016 — three days after Connecticut Common Cause called for the ethics probe of Wade over her ties to Cigna.

The $25,000 that Anthem donated to the DGA wasn't the only money that changed hands.

While pushing the merger, Swedish and Cordani’s companies have in the 2016 election cycle delivered more than $1.1 million to the DGA, which Malloy now chairs. In fact, Anthem is now the single largest donor to the Malloy-run organization. Documents previously obtained by IBT show that under Malloy, the group has promised donors access to governors' policy meetings in exchange for large contributions.

There's much more at the link. Do you wonder why the nation is on the verge of revolt? I certainly don't.

When the Rich Say "Jobs" They Mean "Profit"

A side note. Why is Malloy doing this? Sirota again:

Asked whether Malloy discussed the merger with the CEOs, Malloy spokesperson Chris McClure told IBT in a written statement: “Governor Malloy fights for each and every job, and he believes in cultivating quality relationships with our employers — which our residents expect of us.

"Jobs" is a magic word; it erases (or obscures) all sins. But it also does more than that. "Jobs" is a tell — it tells the truth if you perform a simple substitution. Noam Chomsky:

In contemporary Newspeak, the word “jobs” means “profits”...

When the rich or their agents say "jobs," they always mean "profits." Perform that substitution yourself and everything they say will make sense. For example:

Protests Erupt in San Juan as President Obama Forms Unelected Control Board to Run Puerto Rico

... "I came to see the PROMESA conference that’s going on. I’ve actually made a great sacrifice to come here. I’m not—I’m not rich. I’ve worked hard, and I’ve made—I’ve made a choice in my life to move away from my family to come here to try and create jobs, to invest in Puerto Rico."

Of course the "unelected control board" about creating profit, even if the speaker doesn't recognize it. Just watch. PROMESA will turn out to exist to protect hedge fund investors, even those who bought PR bonds at pennies on the dollar, and their profit. That's why it's unelected, like Michigan's emergency managers.

Or an old favorite:

[President] Clinton, while signing the NAFTA bill, stated that "NAFTA means jobs. American jobs, and good-paying American jobs"...

NAFTA was always about outsourcing jobs and sweetening the profit pie. We know the kind of local jobs NAFTA created; people who sell these things for example.

It's cruel that they do this — dangle the reason (no good jobs) most Americans are close to revolt as a tease to protect the reason (even more excessive profit) those jobs went away in the first place. But there you have it. Your captured government at work.

GP