Hospital Association Raises Objection to Insurer Mergers
The American Hospital Association says the mergers of Anthem and Cigna and of Aetna and Humana could greatly decrease consumer choice and limit medical options. Of the two, however, it says the $54.2 billion Anthem-Cigna megadeal is the greater concern.
The health-insurance industry’s recent move toward mergers has the country’s largest organization for hospital and healthcare systems raising red flags to the Justice Department.
Last month the American Hospital Association (AHA) raised concerns about the $37 billion merger of Aetna and Humana, in which the former will acquire the latter pending approval by federal regulators. Since that proposed merger was announced, however, an even larger deal has surfaced—the planned $54.2 billion purchase of Cigna by Anthem.
Too much consolidation in health insurance would reduce competition and may “diminish the insurers’ willingness to be innovative partners with providers and consumers in transforming care,” AHA Senior Vice President and General Counsel Melinda Reid Hatton wrote in a recent letter to Assistant Attorney General William Baer [PDF].
The hospital industry itself has seen significant consolidation in recent years, drawing similar charges of anticompetitive behavior from insurers. In comments to The Hill, AHIP Vice President of Public Affairs Beth Leonard said that “years of anticompetitive hospital consolidation … have forced patients to pay higher healthcare costs, increased premiums, and limited their healthcare choices.”
AHA has sought to draw a distinction between the two types of consolidation, noting that hospital mergers benefit patients by providing better coordinated treatment and access to care in underserved areas.
“The size, scope, and enduring impact of the announced deals far surpass any hospital merger,” the association wrote in the letter to Baer. “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.”
It continued: “A competitive commercial health insurance market is essential for access, affordability, and innovation in the healthcare sector. Anthem’s proposed acquisition of Cigna presents a substantial risk to such competition on an unprecedented national scope.”
Health insurers are defending the deals. Aetna CEO Mark Bertolini, for example, noted that the company had consulted on the merger with regulatory experts.
“We believe that given the legal advice we have…that this is a very manageable transaction,” Bertolini told CNBC.
The American Medical Association has also come out against the mergers, saying they will “reduce competition and choice.”
“The lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases, and pursue corporate policies that are contrary to patient interests,” AMA President Steven J. Stack said in a news release last month. “Health insurers have been unable to demonstrate that mergers create efficiency and lower health insurance premiums.”