- Last month, a number of senators came forward with some significant reservations about the health insurance mergers taking place between Anthem and Cigna as well as Aetna and Humana. According to a news release, Senators Richard Blumenthal (D-CT), Al Franken (D-MN), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Edward J. Markey (D-MA), Dianne Feinstein (D-CA), and Mazie K. Hirono (D-HI) all sent a letter to the Department of Justice (DOJ) advocating for the blockage of these two major health insurance mergers.
These senators feel that the health insurance mergers would reduce access to healthcare as well as increase the costs of monthly premiums. Additionally, their concern also addresses the potential for job cuts within the health insurance industry if these mergers were to go forward.
The letter from the senators went into detail about how these health insurance mergers would harm competition among small-to-medium-sized payers, cause a market concentration in the Medicare Advantage segment, and reduce competition among Blue Cross Blue Shield markets.
This is not the only letter sent to the US Department of Justice advocating to put an end to these two major health insurance mergers. More than a dozen organizations including the Florida Medical Association, the Health Care Access Coalition, and the Physicians Advocacy Institute sent a letter on June 28 to the Department Of Justice outlining their concerns with the impending mergers.
These organizations are worried about the potential anti-competitive stance that these health insurance mergers could pose along with the damage it could create to the quality and cost of healthcare services around the country. The letter questions whether consumer interests would be protected if these mergers were to go through.
First, much of the regulatory decisions are being made confidentially without public input since there have been very few public hearings being held by states. The state of Connecticut is facing the harshest criticism due to its improper dealings with the impending health insurance mergers.
The dozens of organizations undersigning the letter have found significant problems with state review processes and are urging the Department of Justice to more carefully analyze the potential impacts of the health insurance mergers, particularly on individual states and the nation as a whole.
The letter finds that the current review process many states have followed “lacks integrity and transparency and prevents public confidence.” Essentially, these are additional strikes against the health insurance mergers in which the Department of Justice is asked to keep these consolidations from negatively impacting consumers and the health insurance market.
Both the American Medical Association along with the American Hospital Association have shared their reservations with these mergers as well. In particular, research shows that these mergers will lead to less competition among health payers, which is likely to bring higher premium prices for consumers around the country.
As previously reported, the American Antitrust Institute has also advocated for stopping these mergers from going forward. The American Antitrust Institute has proposed that the two health insurance mergers could pose a monopoly on the market and cause significant burdens on consumers, especially the harm of higher costs for premiums or out-of-pocket spending.
In fact, the Institute has stated that these health insurance mergers could reverse some of the progress that has taken place since the Patient Protection and Affordable Care Act was passed.
Thomas O’Connor, Managing Director at Berkery Noyes, has actually noted that the Affordable Care Act may be what has been causing an upsurge in acquisition and merger activity within the healthcare market.
“There are some very large deals in the market today including the Anthem-Cigna and Aetna-Humana transactions,” O’Connor told HealthPayerIntelligence.com. “There are those that are pending and fascinating, seeking to bring the top five down to the top three, but pull away those top deals and what you’re really seeing is middle-market deals around technology and software solutions along the pain points in the market.”
“Because of the Affordable Care Act and all the activity it spawned, the whole industry is going to change. This could impact everything from consumerization of healthcare and getting more information to payers to solving some of the problems with the Affordable Care Act like high-deductible plans,” continued O’Connor.
Essentially, the healthcare market is experiencing more partnerships and consolidations than ever before and on much smaller levels besides that of the Anthem-Cigna and Aetna-Humana mergers.
“There are going to be a lot of transactions,” he pointed out. “That transition – that chaos – is spawning a plethora of deals. These transactions tend to be smaller and often have a focus on software and data analytics. Putting Anthem-Cigna and Humana aside, which are huge deals, we’re observing many acquisitions throughout the space.”
While these health insurance mergers are very likely to benefit the four companies and its shareholders tremendously, it is expected to bring problems to the market and among the patient or consumer community. The executives at the top may bring in more profit for themselves and their shareholders, but the single middle-class mother taking care of her two children may struggle to pay her family’s premium costs if these mergers take place.
General health plan affordability has led various organizations to speak out against these health insurance mergers. One study found that the states Ohio, Kansas, Alaska, and Iowa will see a significant increase in the consolidation of their Medicare Advantage market.
“The biggest risks that could occur are that the companies combine and use their newfound market power to raise prices, cut corners on healthcare, and just focus on making greater profits,” David Balto, Attorney at the Law Offices of David Balto, told HealthPayerIntelligence.com. “In that case, millions of consumers would have to pay more and be worse off. These mergers could undo a lot of the progress resulting from the Affordable Care Act, which depends on robust competition in health insurance markets.”
With the Affordable Care Act and the Supreme Court rulings positioning the American population to have healthcare coverage or else risk a tax penalty, major health insurance mergers could harm consumers with rising costs and fewer competition. This may leave many consumers currently enrolled in health plans to drop coverage or forego needed medical care in order to keep their out-of-pocket spending minimal.
“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 continued describing the negative effects of the health insurance mergers.
“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 Department of Justice will need to consider the views of the many organizations that have spoken out against these health insurance mergers. The future may show that such large acquisitions will not be applicable to the health insurance market if the federal agency decides to stop the consolidations from moving forward.
“The mergers would reduce the number of national health insurers from five to three. Essentially, you would have UnitedHealthcare, Anthem, and Aetna dominating the market. It might not be a monopoly, but it would be very close, very anticompetitive, and very bad for consumers,” Balto concluded in the interview.