Aetna’s Humana Acquisition Bringing Strong Opposition

November 18, 2015 - The complications between the free market of the health insurance industry tied with increasingly complex federal mandates over the last several years is coming to a head with the Humana acquisition by the insurer Aetna. According to a press release from Aetna, its shareholders have approved the distribution of Aetna common shares among Humana stockholders due to the proposed acquisition of the insurance company.

The release also explains that 99 percent of the Aetna shareholders voted in favor of this move toward issuing the common shares. The Humana acquisition is still in the process of being approved based on customary closing conditions, the federal Hart-Scott-Rodino antitrust waiting period, and state insurance department approvals.

The news release also states that the companies expect the transition to be completed by the end of 2016. While the Humana acquisition may seem relatively free of issue, former Secretary of State and presidential hopeful Hillary Clinton has taken a stance against the large mergers taking place within the health insurance industry.

“As we see more consolidation in health care, among both providers and insurers, I’m worried that the balance of power is moving too far away from consumers,” Clinton said in a public statement.

It seems that more consolidation is occurring among both insurers as well as entire health systems, which may trouble some political forces due to the impact on market competition. Currently, the largest five health insurance companies are looking toward consolidating into three insurers.

This market transformation includes Anthem and Cigna merging as well as the Aetna and Humana acquisition. The fear is that these acquisitions and mergers will increase premium costs among the consumer base and may negatively affect consumers in more remote states. Hillary Clinton is urging antitrust officials to look more closely at these mergers to ensure no illegal or immoral actions have been taken.

“I am very skeptical of the claim that consumers will benefit from them because the evidence from careful studies shows that too often the companies end up pocketing profits rather than passing savings to consumers. These companies should commit to passing on savings and efficiencies to consumers as lower premiums and out-of-pocket costs,” Hillary Clinton mentioned in a public statement.

Antitrust law will need to be dissected in detail if politicians continue to position that health insurance mergers may lead to problems for the consumer base. It could also be beneficial for the federal government to take a look at the consolidation taking place among hospital and healthcare systems, as the lone physician office is becoming a thing of the past.

With reimbursement becoming more complicated, it seems that hospitals are acquiring doctor’s practices due to the difficulties of running a single-physician practice in today’s economic and political climate.

Outpatient costs are increasing due to this consolidation, one study found, which means high out-of-pocket costs may not only depend upon health insurers but the system as a whole.

Nonetheless, a number of healthcare organizations have sent letters to federal agencies disapproving of the Aetna and Humana acquisition along with the Anthem and Cigna merger.

The American Medical Association, for instance, sent a letter to the Assistant Attorney General William Baer of the Department of Justice in which the organization outlined its concerns with the Humana acquisition and the consolidation of Cigna by Anthem.

The main points the American Medical Association is concerned with are that consumer affordability, quality of care, and access to care will be negatively affected by these insurer consolidations.

The letter also pointed out that past literature and research revealed that insurance mergers or acquisitions often brings price increases instead of more efficiency or lower costs. Health plan quality may also decrease, the AMA letter stated.

“Any remedy short of blocking the mergers would not adequately protect consumers. A divestiture would not protect against the loss of potential competition that occurs when two of the five largest health insurers are eliminated. Moreover, divesture could be highly disruptive to the marketplace and cause harm to consumers, especially in Medicare Advantage markets where the elderly would be faced with a new insurer,” the letter positioned.

“Accordingly, the AMA respectfully urges DOJ to block the mergers in order to protect consumers from premium increases, lower plan quality, and a reduction in the quantity and quality of physician services.”

The Coalition to Protect Patient Choice stated in a press release its disapproval of these mergers and acquisitions, as it may negatively impact consumers’ choice in health insurance, access to healthcare, and affordability of coverage plans. The group is searching for ways to better educate policymakers on the importance of competition within the healthcare marketplace.

With only five major health insurers throughout the nation including UnitedHealth, Anthem, Cigna, Aetna and Humana, the insurance market is presently consolidated and costs of premiums are already affected, the news release stated. The coalition expects health insurance costs to rise with these mergers with no cost savings passed down to the consumer.

“Health insurance markets are already highly concentrated throughout the United States, and typically dominated by either one or two incumbent insurers,” Mark Cooper, Research Director for the Consumer Federation of America, stated in the press release.

“The combination of Anthem and Cigna and Aetna and Humana will further weaken the feeble competition in a large number of insurance markets. It is incumbent upon federal and state enforcers and regulators to review these mergers with the utmost scrutiny. The coalition will provide tools and valuable information to facilitate review of these mergers, as well as offer information and analysis of other health care competition concerns.”