Health Insurance Acquisitions Impede Competition in 24 States
New findings from the American Medical Association show that two health insurance acquisitions could reduce competition significantly in 24 states.
By - The American Medical Association (AMA) announced today in a press release the results of a new study show that the health insurance acquisitions between Anthem-Cigna and Aetna-Humana would obstruct competition in the health insurance market throughout 24 states.
The AMA stands in full support of the Department of Justice and its efforts to block the health insurance acquisitions that would reduce four national payers down to two companies, which is supported by prior statements from the organization. The AMA study found that the merger between Anthem and Cigna would cut down competition in 121 metropolitan areas across 14 states. The health insurance acquisition between Aetna and Humana would also decrease competition in 51 metropolitan areas in 15 states.
“The AMA analyses show that Anthem-Cigna and Aetna-Humana mergers would significantly compromise market competition in the health insurance industry and threaten health care access, quality and affordability,” AMA President Andrew W. Gurman, M.D., said in a public statement. “With existing competition in health insurance markets already at alarmingly low levels, federal and state antitrust officials have powerful reasons to block harmful mergers and foster a more competitive marketplace that will operate in patients' best interests.”
The AMA used data from the Competition in Health Insurance: A Comprehensive Study of U.S. Markets report to determine exactly how much the health insurance mergers would affect insurer competition throughout the country. The study used data from 2014 based on commercial enrollment in health maintenance organizations (HMO), preferred provider organizations (PPO), consumer-driven health plans and point-of-service (POS) plans.
When looking at the Anthem-Cigna merger, the states that would have health insurance competition reduced significantly include California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia and Wisconsin, the AMA study found. Out of all these states, five have not worked toward blocking the health insurance acquisition including Indiana, Kentucky, Nevada, Ohio and Wisconsin.
The Aetna-Humana merger would affect competition in the health insurance market across the following states: Arizona, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Ohio, Tennessee, Texas, Utah, Wisconsin and West Virginia. A total of 11 states within this list have not taken a stance toward stopping the health insurance acquisitions from proceeding.
“High-quality medical care is only possible if regulators enforce antitrust laws to prohibit harmful health insurance mergers that run counter to patients' best interests,” Dr. Gurman continued. “It is clear that more can be done in certain states where the attorneys general have not yet taken a strong stance against the mergers. To ensure patients are better served by dynamic and competitive health insurance markets, the AMA will work to expand the bipartisan group of state attorneys general that has joined the Justice Department to block the massive deals.”
The AMA study also discovered that 71 percent of the metropolitan areas analyzed would see a significant drop in health insurer competition if the mergers were to proceed. The AMA states that these particular markets are “highly concentrated.” Additionally, in 40 percent of the metropolitan areas looked at, one health payer had a hold on at least 50 percent of the commercial health insurance market.
In fact, 14 states were left with one insurer that had a 50 percent share of the commercial health insurance market, which was comprised of Alabama, Delaware, Hawaii, Illinois, Indiana, Louisiana, Michigan, Nebraska, North Carolina, North Dakota, Rhode Island, South Carolina, Vermont and Wyoming.
Earlier this month, the AMA along with the Medical Society of the State of New York (MSSNY) asked state insurance regulators in New York to block the health insurance acquisition taking place between Anthem and Cigna. Essentially, the organizations argued that the health insurance mergers would reduce healthcare access and lead to unaffordable health plans.
While some states have stood against these mergers, the US Department of Justice filed a lawsuit against the health insurance acquisitions this past July stating that these mergers would harm competition and negatively affect consumers including seniors and working families. Additionally, Principal Deputy Associate Attorney General Bill Baer argued that employers would see fewer choices and more expensive plans if the mergers were to proceed.
With an already apparent decline in competition within the health insurance market, these mergers would further hurt consumer interests, said Baer during a press conference announcing the Department of Justice lawsuit.
“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 claimed. “Our lawsuits aim to protect the many Americans who depend on these four health insurance companies for their coverage.”
The study from the American Medical Association further supports the theories positioned by Department of Justice officials with regard to the anticompetitive impact that these mergers would have on the health insurance market.
Dig Deeper:
How Health Insurance Mergers Could Change the Payer Industry
Why Aetna, Humana Argue in Favor of Health Insurance Merger
