- As top companies in private health insurance — from Anthem and Cigna to Aetna and Humana — begin to merge, competition between companies and the variety of consumer choices begins to dwindle, leaving the health insurance market susceptible to monopolies.
In an August 5 letter to Department of Justice (DoJ) Assistant Attorney General William Baer, the American Hospital Association (AHA) addressed DoJ’s need to enforce antitrust laws in both mergers, but specifically addressing the one of Anthem and Cigna.
As reported by RevCycleIntelligence.com, the merger of four of the nation’s five major healthcare providers may not be the best thing for consumers, as it decreases competition between providers and the amount of choices consumers have for coverage. As a result, consumers may face higher insurance premiums.
AHA reinforces those facts in their letter to Assistant Attorney General Baer, stating that they support any antitrust enforcement DoJ may undertake to prevent health insurance companies from monopolizing the market.
“We believe the announced deals cited above have that potential and, therefore, merit the closest scrutiny to determine whether remedies, such as divestitures, have any chance of ameliorating the enduring damage they could do as a result of the loss of such significant competition,” writes the Melinda Reid Hatton, Senior Vice President and General Counsel of AHA, in the letter.
The letter continues to address the enormous size of this combined health insurance company, stating that no other company could ever replicate its enormity and further eliminating any form of competition.
“These transactions will combine four of the five national health insurance companies, with effectively no possibility that existing firms could replicate their size and scope,” Hatton says.
The combination of Anthem and Cigna would serve 53 million medical members and would produce $115 billion in annual revenues. The Aetna and Humana merger is expected to be of similar size.
The American Medical Association (AMA) shares AHA’s opinion that the Department of Justice must do thorough antitrust enforcement of these company mergers.
“Given the troubling trends in the health insurance market, the AMA believes federal and state regulators must take a hard look at proposed health insurer mergers,” AMA President Steven J. Stack, MD, said last month. “Antitrust laws that prohibit harmful mergers must be enforced and anticompetitive conduct by insurers must be stopped.”
What does this mean for consumers?
According to an AHA blog post, medical insurance company mergers rarely benefit the consumer, even as these providers are increasing their revenue.
“Independent research on previous insurance market consolidation shows that insurers do not share savings with their customers,” argues AHA's Executive Vice President of Advocacy Rick Pollack.
This is particularly problematic due to the decrease in consumer choice mentioned above. Consumers will find themselves stuck paying a premium that is too expensive for them because they have no other choice of medical insurance provider.
As these acquisition deals move forward, it is up to the Department of Justice whether they will inspect these mergers and enforce the antitrust laws that may come into play, preserving market competition.