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Department of Justice Moves to Block Health Insurance Mergers

The promised divestitures would not be enough to make a difference when it comes to the potential harm that these health insurance mergers would make on consumers.

While there have been talks of the Department of Justice (DOJ) looking to block the Anthem-Cigna and Aetna-Humana health insurance mergers by filing lawsuits, the final decision was announced today at a press conference. The DOJ will proceed with the lawsuits. It is vital to consider the issues that many opponents have put forth as to why these health insurance mergers should not be allowed to continue.

Health Insurance Mergers

Aetna attempted to satisfy the Department of Justice and its concerns by promising to divest $1 billion in assets. However, David Balto, an antitrust attorney based in Washington D.C. wrote for The Hill why the Department of Justice should block the Anthem-Cigna and Aetna-Humana health insurance mergers.

First, it is important to note that the health insurance market already has minimal competition, as the top five health payers already control the majority of this particular market. Additionally, the competition that is already present between Humana and Aetna is key for protecting consumers from higher premiums, more narrow provider networks, and increases in out-of-pocket costs.

A study from the Center for American Progress showed that Medicare Advantage consumers had much lower premium costs when Aetna and Humana was pitted against each other and market competition flourished. If these health insurance mergers were to proceed, premium costs would rise steeply.

Along with these concerns, Balto discussed how the promised divestitures would not be enough to make a difference when it comes to the potential harm that these health insurance mergers would make on consumers. During a press conference today, Principal Deputy Associate Attorney General Bill Baer also criticized the fact that these divestitures would not be enough to mitigate the negative effects of these health insurance mergers.

“The two mergers that we are challenging today involve four of the five largest health insurance companies in the country,” Baer stated at the press conference. “They put at risk the system that Americans across the country rely on to pay for their healthcare.”

“These insurance companies are thriving as independent firms. They do not need these deals to survive. These mergers are likely to harm competition [that would affect consumers] including seniors, working families, employers, as well as doctors and hospitals. Each of these deals poses unacceptable risk to competition,” Baer pronounced.

Baer spoke about how these mergers would impact employers as well, mentioning that, “For the largest, most sophisticated employer, there are only four good choices. For large and more regional employers located in some of the biggest cities in the country, Anthem and Cigna are only two of a handful of options.”

Essentially, there is already a decline in competition within the health insurance market and the health insurance mergers would pose significant problems to keeping the marketplace robust. Baer went on to discuss how the competition between Anthem and Cigna has brought lower costs.

“Anthem has had to respond by competing harder and keeping costs down to prevent Cigna from winning away Anthem business. All this competition would be lost if this merger was to take place,” Baer pointed out.

“Our investigation showed that Aetna’s acquisition of Humana would hurt Seniors with Medicare Advantage plans. This deal would eliminate Humana as a fierce competitor. Seniors would see their choices limited, their benefits reduced, and their premiums go up,” Baer added. “Our lawsuits aim to protect the many Americans who depend on these four health insurance companies for their coverage.”

Attorney General Loretta Lynch was first to announce during the press conference the intended lawsuits against the two major health insurance mergers.

“I’m announcing that the Department of Justice is suing to block both the Anthem-Cigna and Aetna-Humana health insurance mergers,” Attorney General Lynch stated. “These mergers would fundamentally reshape the health insurance industry. They would leave the top five health insurers in just three mammoth companies.”

“Competition would be substantially reduced for hundreds of thousands of families. These mergers may indeed increase the profits of Aetna and Anthem but they would do so at the cost of families, employers, hospitals, and providers,” Lynch continued. “For most Americans health insurance is not a luxury but a necessity to lead healthy and productive lives. If the big five were to become three, not only would bank accounts of Americans suffer but the Americans themselves.”

In a press release, the Coalition to Protect Patient Choice announced their support of the DOJ’s move to block these mergers in order to protect consumer rights.

“We are immensely pleased by DOJ’s decision,” said David Balto, counsel for the Coalition to Protect Patient Choice. “They recognized that when health insurers merge, consumers pay the price in higher premiums, less competition, and lower quality of care. The companies couldn’t even provide convincing evidence of how the mergers would benefit consumers. We stand ready to support DOJ in its actions and to keep educating the public about the importance of competition.”

“Together the companies spent over $400 million on these deals,” Balto concluded. “But consumer advocates weren't fooled, and all that money couldn't change the facts. In the future, the companies should focus on providing better service and lower prices, instead of trying to get anticompetitive mergers approved."

 

Dig Deeper:

DOJ Sees Continued Opposition to Health Insurance Mergers

DOJ May File Lawsuits against Health Insurance Acquisitions

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