- In the state of Missouri, policymakers issued an order that would prevent the Aetna-Humana acquisition from proceeding in post-merger activity within Missouri's Medicare Advantage plans as well as some commercial health plans. The two biggest health insurance mergers on the horizon today are receiving a fair amount of scrutiny from a wide number of stakeholders.
The American Medical Association (AMA), for instance, released a statement by President Steven J. Stack, MD, supporting Missouri policymakers for their decision to stop the Aetna-Humana merger from impacting their healthcare delivery system.
The AMA declared that major health insurance mergers would create “anticompetitive market power” and thereby hurt the end consumers. The merger in Missouri could have hurt the Medicare Advantage market particularly the elderly patients who are in need of affordable healthcare coverage.
“The Missouri order strongly validates concerns that AMA has expressed to Missouri regulators, as well as the U.S. Department of Justice, and officials in other states impacted by the proposed health insurer mergers,” Stack said in the statement.
“Missouri regulators took the notable step of recognizing Medicare Advantage as a relevant product market, bucking opposing pressure from Aetna. In Missouri, the merger would have substantially compromised competition in the state's Medicare Advantage markets with negative consequences for elderly patients in the need for health care access, quality and affordability. According to a recent AMA analysis of Medicare Advantage markets, Missouri was expected to be among the states where the Aetna-Humana deal would be presumed to be anticompetitive.”
Another stakeholder that believes the health insurance mergers between Aetna-Humana and Cigna-Anthem is the American Antitrust Institute. In a letter it sent to the Department of Justice antitrust division, the Institute discussed its concerns with the pending health insurance mergers.
First and foremost, it is possible that a monopoly will be gained on the health insurance market if the Aetna-Humana and Cigna-Anthem mergers are to take place, states the letter from the American Antitrust Institute. The other major issue found is that these health insurance mergers will make it more challenging to benefit consumers and meet their healthcare needs.
The current health insurance market is also very unpredictable at this point in time, argues the American Antitrust Institute, which means these major mergers could cause significant disruption to the entire industry. Essentially, the American Antitrust Institute asked the Department of Justice to not allow the continuation of these two giant health insurance mergers.
While the American Medical Association and the American Antitrust Institute fear the upcoming health insurance mergers, there are a number of other experts that disagree with the notion that these mergers will create a monopoly on the market.
When asked whether the Anthem-Cigna and Aetna-Humana mergers will stifle competition in the health insurance market, Thomas O’Connor, Managing Director at Berkery Noyes, replied, “I don’t think so. There’s a high level of innovation in the market today including the health insurance exchanges. Moreover there are many different people and plenty of opportunities for money to be made. There’s a lot of money in the market as well.”
“In addition there are more payers today than there have ever been. It’s gone from somewhere around 85 to 110 payers in the marketplace. The big names are there but the health insurance exchanges will be a more significant part of the market as we move forward.”
“There are challenges and opportunities to offer differentiated products, varied prices, and distinct solutions. It will be a little more aligned, personal, and consumer-centric. Some of the big guys need to innovate more over time, but I don’t expect it to stifle competition.”
Indiana Department of Insurance Commissioner Stephen W. Robertson also supports the Anthem-Cigna acquisition, as he has approved the health insurance merger through a finalized order, according to a press release from Anthem.
At this point in time, the Anthem-Cigna acquisition has received regulatory approval from 12 states. Over the last eight months, Anthem has worked with policymakers and state regulators to get this particular acquisition approved. Additionally, almost all - 99 percent - of Anthem and Cigna shareholders support this merger, the press release states.
In an exclusive interview, Patrick Pilch, Managing Director and National Healthcare Advisory Leader of The BDO Center for Healthcare Excellence & Innovation, discussed his viewpoint of these health insurance mergers and their potential impact on the future of the health insurance industry.
When asked whether the Aetna-Humana and Anthem-Cigna mergers could bring a monopoly to the marketplace, Pilch mentioned that there will be market concentrations but a pure monopoly is unlikely. However, for consumers, the impact of these health insurance mergers could lead to more narrow provider networks, Pilch said.
“I think you could run into an issue with respect to networks and in the narrowing of networks. That’s the challenge,” Pilch stated. “This gets back to an earlier thought - the thought is that networks could reduce administrative costs. On the commercial side, I believe that is possible. There’s more functionality and scalability in terms of administration. Insurers could pursue more value-based payment arrangements.”
“Theoretically, payers could create a network based on higher-quality providers who create a platform for providing better care and lowering the total cost of care. The key thing to focus on – where the direct impact would be – is the narrowing of networks – not limiting of access. Negotiating directly with high quality providers is good for the consumer base.”
“However, where the transaction is limited to cost savings not associated with efficiencies but rather access curbing, the consumer is limited by his or her choice – this is not a significant benefit to the consumer. That’s a direct effect right there.”
The future of the market may also exhibit more payers attempting to follow in the footsteps of Aetna and Anthem. The number of payers attempting to scale may increase over the coming years, explained Pilch.
There are two clear perspectives on the potential impact of these major health insurance mergers. Some believe it will lead to a monopoly while others find no such issues. Time will tell whether these mergers are allowed to move forward and how they may affect the health insurance market.