AMA Urges NY Regulators to Reject Health Insurance Mergers

September 12, 2016 - The Anthem-Cigna and Aetna-Humana health insurance mergers are facing more and more scrutiny throughout the medical industry and among federal officials. While the US Department of Justice filed a lawsuit against these health insurance mergers, last week, American Medical Association (AMA) representatives along with the Medical Society of the State of New York (MSSNY) asked state insurance regulators to reject the acquisition proposed by Anthem to merge with Cigna.

According to a press release from the American Medical Association, state regulators were advised that the health insurance merger would be “bad medicine” for the state of New York. The physician groups argued that the affordability of health plans would decrease while healthcare access would drop as well due to the health insurance mergers.

“Anthem has been unable to substantiate its claim that the merger would create efficiencies that would lower health care costs,” Henry Allen, the AMA's top antitrust attorney, stated in the press release. “To the contrary, economic studies have shown that rather than passing any benefits from efficiencies to consumers, health insurer mergers actually result in higher premiums. In effect, the costly process of merging two giant insurance bureaucracies is born on the backs of patients and employers.”

In particular, the press release outlines the potential for the health insurance merger to harm competition in the market across the state of New York. The regulators were provided with an analysis from the AMA that looks at New York’s commercial health insurance markets and how the merger would affect federal antitrust regulations throughout the state.

For example, the analysis finds that the Anthem-Cigna health insurance merger would create more control and less competition in Long Island at near-monopoly levels. In New York City and the Hudson Valley region, anticompetitive problems may also arise due to the acquisition.

“Removing a major competitor would have serious repercussions within highly populated areas in New York State where the commercial health insurance market is already highly concentrated or moderately concentrated,” MSSNY President Malcolm Reid, M.D., said in a public statement. “A further consolidation of these markets would allow the remaining insurers to determine the scope, coverage and quality of health care. As it is, health plan networks are already too narrow, and premiums are already too high.”

The U.S. Department of Justice and New York State Attorney General Eric Schneiderman have both joined forces to put an end to the health insurance mergers taking place between Anthem and Cigna along with Aetna and Humana. These acquisitions could cause sincere financial and quality control issues for both patients and healthcare providers, according to the release.

“If Anthem gets its way, it will have even less incentive than it does now to take care of people, and the merger would ultimately compromise the ability of physicians to advocate for their patients,” Dr. Reid continued. “In practice, market power allows big insurers to exercise control over clinical decisions, which undermines the patient-physician relationship and eliminates key safeguards of patient care.”

As such, the AMA and the MSSNY have asked the New York State Department of Financial Services to reject the proposed Anthem-Cigna merger in order to preserve the current competition within the health insurance market.

“Competition, not consolidation, is the right prescription for New York's health insurance markets,” Allen concluded. “Competition among health insurers can lower premiums, enhance customer service, and spur innovative ways to improve quality while lowering costs. Patients benefit when they can choose from an array of insurers who compete for their business by offering desirable coverage at competitive prices.”

Joseph Valenti, MD, FACOG, Board Member of the Physicians Foundation, wrote an opinion editorial in Forbes about his perspective on how the health insurance mergers may harm patients and the healthcare industry at large.

First, Valenti outlines that these mergers are likely to bring higher premiums for consumers while potentially reducing payments to hospitals and physicians. What does this mean? The large, national payers would be reaping the profits from their merger if Valenti’s prediction were to come true.

The four major payers are already handling coverage for nearly one-third of the American public and the mergers would only bring the insurance companies more control over costs and services provided to their customers. The editorial addresses that many health payers choose a provider network mostly based on the cost that physicians have ordered for patient care instead of focusing on patient outcomes, quality of care, or patient satisfaction.

With insurers paying doctors less due to company consolidation, physician practices are forced to see more patients in order to keep revenue up, which leads to less face-to-face time with the people they’re meant to treat. Essentially, Valenti argues that health insurance mergers would negatively impact patient care and provider revenue.

However, it is also important to note that the healthcare payers looking to merge have stated that their consolidation would benefit consumers including seniors looking for cheaper Medicare Advantage plans. If the mergers would continue, more Medicare options would be available, stated Aetna and Humana.

State regulators around the country will need to take into consideration the varying opinions and findings from national healthcare organizations when deciding whether or not to support these two major health insurance mergers.

Dig Deeper:

How Health Insurance Mergers Could Change the Payer Industry

Did Aetna Need Merger to Stay in Health Insurance Exchanges?