Government will keep a close eye on health plan mergers

In an attempt to curb any potential monopolies within the health insurance industry, Department of Justice antitrust chief Christine Varney said on Tuesday that the Obama administration would "not hesitate" to block mergers deemed "likely to reduce competition." 

"The goals of healthcare reform cannot be achieved if mergers between significant insurers in a particular market substantially reduce competition," Varney said at a joint meeting of the American Bar Association and the American Health Lawyers Association. "Nor can those goals be realized if dominant insurers use exclusionary practices to blockade entry or expansion by alternative insurers." 

Varney specifically talked about the government's opposition to a planned merger between Blue Cross Blue Shield of Michigan and Physicians Health Plan of Mid-Michigan. According to Varney, Blue Cross-Michigan already had close to a 70 percent market share in Lansing, Mich., while Physicians Health Plan held a 20 percent market share. 

"Our investigation found that entrants were unlikely to be able to establish a competitive provider network at comparable rates in Lansing, which would have prevented or significantly delayed the level of entry necessary to defeat an anticompetitive price increase," Varney said. 

For more on Varney's speech:
- here's the actual speech
- read this Associated Press article