Federal antitrust scrutiny for insurers: It's about time

Over the past several years, health insurance companies have done an extremely good job of merging and acquiring each other. That's so much the case that in some markets, there's only one or two major insurers serving an entire area. In many other states, a small handful insurers dominate large markets.

For example, in Pennsylvania, regulators announced earlier this summer that they were investigating the state's four Blue Cross and Blue Shield plans on charges of "anticompetitive or unfair trade practices." The Blues there hold about 60 percent of the state's private health insurance market.

Another recent example of health plan concentration comes from Nevada, where a planned acquisition of a rival by UnitedHealth Group would have given UHG 78 percent of the state's entire health plan market, according to the AMA. Despite these protests, UnitedHealth was allowed to complete the $2.4 billion acquisition of Sierra Health Services.

These are just a couple of examples of the level to which insurers have brought the fine art of consolidation. And while they might not have malign intent, it seems likely that these concentrations of power are having just the effect you might expect--making sure that they have all the power when negotiating with doctors and hospitals.

Aren't such concerns the very reason U.S. antitrust law exists? While it's all well and good to let the states do some of the cleanup work, clearly legislators felt that antitrust was enough of a threat that they gave two powerful agencies a good deal of latitude in monitoring such deals.

Whatever reason Congress might have had to exempt health plans from antitrust scrutiny, under today's conditions it seems ridiculous to exempt them from it, given the tidal wave of M&A the industry in recent years. The new bill backed by Sen. Patrick Leahy of Vermont--which would demand that the FTC and DOJ look for egregious antitrust violations among health plans and malpractice insurers--deserves our support. - Anne

P.S.: Wondering what's up with ARRA and how it affects you? Check out the recorded version of our recent ARRA Webinar. Randy Spratt, Executive Vice President & CTO/CIO, at McKesson Corporation, discussed some of the more vexing provisions of the American Recovery and Reinvestment Act, including a sweeping new requirement that now holds your vendors and other business associates accountable securing electronic patient data. View it on demand, at no charge, at http://www.fiercehealthcare.com/webinars.