Senators and expert witnesses alike expressed skepticism about the proposed merger deals between four of the country's largest health insurers during a hearing Tuesday on Capitol Hill.
In the second recent Congressional hearing about consolidation in the healthcare industry, lawmakers put two insurance executives on the hot seat--Aetna CEO Mark Bertolini, (picutred right), and Anthem CEO Joseph Swedish, (pictured left). They also heard testimony from American Hospital Association President Rick Pollack, a vocal critic of the insurer deals, and three other health policy experts. The hearing was held by the Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights.
Perhaps the toughest line of questioning came from Sen. Al Franken (D-Minn.), who asked Bertolini and Swedish directly whether their companies would commit to passing merger-achieved savings onto consumers. In fact, he asked more than once, as he noted the first time that Bertolini's response was "not quite an answer."
Bertolini's final answer was: "Our savings will be passed along in the pricing of our product."
Swedish, for his part, answered, "We're committed to driving affordability for all of our customers. We're committed to balancing the investments that are necessary to improve our products to the benefit of our consumers, and I believe by definition, that generates savings that go directly to the consumer."
Expert witness Leemore Dafny, a Northwestern University hospital and health services professor, also was skeptical of the concept that insurer consolidation will benefit consumers, noting that her research on past deals--including the 1999 merger between Aetna and Prudential--has indicated that they in fact caused premiums to rise. Furthermore, the market imperative to pass savings onto consumers is weaker now than it has been in the past, she said.
Nevertheless, Swedish and Bertolini reiterated many of the arguments they have made to shareholders and in the press that their respective deals will accelerate their companies' transition to value-based care, increase efficiencies and not unduly damage competition.
For example, Bertolini testified that despite claims to the contrary, "robust choice" will remain in the Medicare Advantage market if the Aetna-Humana deal is approved. Both companies' cultures, he emphasized, are "focused on improving health, not just selling products." What's more, if Aetna acquires Humana, its initiative to raise the minimum wage for its employees will benefit Humana employees as well, Bertolini pointed out.
Swedish added that consumers are "the most important beneficiaries of this transaction" between Anthem and Cigna, further noting that Anthem plans to draw upon Cigna's wellness program expertise and international business. What the two companies could accomplish together is "exponentially" greater than what they could accomplish individually when it comes to increasing value for the consumer, he said.
Another of the expert witnesses, Paul Ginsburg, the Norman Topping Chair in Medicine and Public Policy at the University of Southern California, noted potential upsides of the deals, including substantial reductions in administrative costs and the ability of the insurers to transition to value-based care.
Yet Pollack argued that insurance companies actually aren't fostering innovation, but instead "riding the wave" of providers' efforts to transform the system, all the while reaping "considerable financial benefits."
If the Aetna-Humana and Anthem-Cigna deals are approved, he said, the two resulting companies would cover 40 percent of Americans. The Department of Justice was wise to heavily scrutinize the recent telecommunications deals for their negative effects on consumers, he added, and should do the same.
Pollack made similar arguments in the previous House hearing on healthcare consolidation, joined by an American Medical Association representative who expressed that organization's similar position.
To learn more:
- here's the hearing replay
Lawmakers, industry leaders clash over effects of healthcare consolidation
Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition
American Hospital Association takes aim at Anthem-Cigna merger
All eyes on how regulators will respond to massive health insurer mergers
Partisan bickering distracts from real healthcare policy issues