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Opposition Increases to Aetna, Anthem Health Insurance Mergers

The problems outlined by the senators regarding these health insurance mergers aligns directly with the opposition that the American Hospital Association has expressed.

The health insurance mergers between Aetna and Humana along with Anthem and Cigna seem to have a fair amount of opposition from both healthcare organizations as well as politicians around the country. The American Hospital Association (AHA) reported that a large number of senators are urging the Department of Justice to consider opposing these health insurance mergers.

Health Insurance Market

The senators asking the Department of Justice to stop the mergers from taking place include Sens. Richard Blumenthal (D-CT), Al Franken (D-MN), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Edward Markey (D-MA), Dianne Feinstein (D-CA) and Mazie Hirono (D-HI). The senators sent a letter to Renata Hesse, the Principal Deputy Assistant Attorney General at the Department of Justice.

One of the issues found in the letter is that the Aetna-Humana merger pose an anti-competitive stance in the Medicare Advantage market, which could harm the financial well being of other payers as well as potentially bring problems for Medicare beneficiaries. The letter also argues that the Anthem-Cigna merger would lead to reduced competition for Blue Cross Blue Shield markets.

The problems outlined by the senators regarding these health insurance mergers aligns directly with the opposition that the American Hospital Association has expressed to these acquisitions. First, these health insurance mergers could have an impact on premium prices and out-of-pocket costs for consumers.

Greater consolidation in the health insurance market could also lead to more abuse by the top payers, stated the letter. Merely looking at past instances of mergers have shown that premium prices increase significantly and these mergers would give Aetna-Humana and Anthem-Cigna too much power, the senators argued.

For example, when the companies Aetna and Prudential merged, premium prices jumped by 7 percent and consumer costs for health insurance went up by $34 billion. These type of mergers seem to lead to less competition that could bring down premium prices and actually lead to a rise in already burgeoning healthcare costs.

“Vigorous competition in any market yields the best products for consumers at the lowest price,” the letter stated. “Yet, these mergers would occur against a landscape of a health insurance industry that is already highly concentrated. After a number of mergers in recent years, the three largest insurers hold 80 percent or more of the market share in almost two-thirds of states. This trend toward consolidation in the health insurance market has resulted in these few, large insurers having significant leverage - and with it, the potential for market power abuse.”

“Careful consideration of the impact of even more consolidation and market power concentration if the Aetna-Humana and Anthem-Cigna mergers are approved indicates that no divestitures or behavioral remedies can fully replace the lost competition,” the letter continued. “Therefore, we urge the DOJ to challenge these mergers from proceeding and to prevent the damage they would cause to competition and consumers.”

David Balto, Attorney at the Law Offices of David Balto, spoke with HealthPayerIntelligence.com about some of the risks associated with these health insurance mergers.

“A decrease in competition within the health insurance industry would harm consumers by leading to higher premiums and overall costs, less consumer choice, and possible reduced quality of care,” Balto said. “Competition in health insurance markets spurs companies to offer lower prices, improved products and benefits, and innovation, and these mergers will eliminate vast swaths of competition.”

The American Medical Association (AMA) has also come out against the health insurance mergers. Further consolidation will lead to anticompetitive stances in the health insurance market, the AMA stated last year.

Healthcare providers may also suffer from lower reimbursement due to these mergers while consumers may see higher costs, according to the AMA. In addition, consumers may have less access to affordable health plans.

Whether or not these health insurance mergers gain the right to proceed remains to be seen, but one thing is clear. There is a multitude of opposition standing in the way of these mergers.

 

Dig Deeper:

Will Health Insurance Mergers Stifle Market Competition?

How State Policymakers Impact the Health Insurance Mergers

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