American Hospital Association takes aim at Anthem-Cigna merger

Having already spoken out against the proposed mergers in the health insurance industry, the American Hospital Association (AHA) has now ratcheted up its scrutiny of one specific mega-deal in a letter to the Department of Justice.

The letter's preface expresses the hospital lobbying group's concern about both the Anthem-Cigna merger and the Aetna-Humana deal, both of which it says could "substantially reduce competition and substantially diminish the insurers' willingness to be innovative partners with providers and consumers in transforming care." But because both proposed mergers are so complex, the AHA will detail its concerns with each in separate letters--starting with Anthem and Cigna.

In order to pass antitrust scrutiny, Anthem and Cigna may need to explore divestitures in markets that serve 45 million customers throughout 817 geographic areas, the letter notes, and about 55 percent of those covered lives reside in markets where there is no "viable divestiture candidate" for those assets.

"The risk of harm to these tens of millions of consumers is further enhanced because newentry is unlikely to prevent, or even partially offset, the transaction's potential anticompetitive effects," the letter adds.

The AHA also takes aim at suggestions that the insurer mergers could cut healthcare costs, deeming it "even less likely" that the companies would pass these savings on to consumers. As demand for health insurance is inelastic, the letter argues, it gives large health insurance companies little incentive to pass on cost savings.

Finally, though some have drawn comparisons between provider consolidation and the current health insurance deals on the table, the two are "fundamentally different," the AHA says, as the "size, scope and enduring impact of the announced deals far surpass any hospital merger."

In response to the letter, Anthem wrote in an email that it plans to meet with hospitals and other stakeholders to make its case about the deal's benefits, Reuters reports. Cigna CEO David Cordani, meanwhile, said in a recent interview that he's confident his company's deal with Anthem will pass regulatory scrutiny.

To learn more:
- read the letter
- here's the Reuters article

 

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