3 burning questions about the major insurer mergers

During Tuesday's Senate committee hearing on the two pending health insurer mergers, the CEOs of Aetna and Anthem, as expected, explained why they thought the deals' benefits outweigh any anticompetitive concerns.

But as Sen. Richard Blumenthal (D-Conn.), noted, the two-plus hour hearing only scratched the surface of some of the complex issues associated with the proposed deals, which would pare down the country's largest health insurers from five to three.

Here are three of the questions surrounding the deals that lawmakers and expert witnesses addressed, but about which they didn't fully reach a consensus:

How will the mergers interact with Anthem's Blue Cross Blue Shield affiliation?

Anthem CEO Joseph Swedish explained during the hearing that his company only operates BCBS-licensed plans in 14 states. Within those states, the Cigna brand may in fact come into Anthem's Blue Cross portfolio, but in the national account space, Cigna will continue to compete with Blues plans.

In the states where Anthem does not operate a Blues plan, Cigna will continue to compete against those states' Blues plans, he said.

Yet Leemore Dafney, a Northwestern University hospital and health services professor who has researched past insurer mergers, said: "With regards to the national plans, the notion that Anthem and Cigna will continue competing in that segment--they're going to be the same entity, so they might have two names, but I don't see how that's competition."

And American Hospital Association President Rick Pollack argued that "there's an extensive interconnection across the Blues system, and the Anthem-Cigna deal will add to the Blue dominance and create even larger barriers to entry."

Will the mergers damage competition in the Medicare Advantage sector?

Aetna CEO Mark Bertolini cited the Avalere analysis that found the average MA beneficiary had a choice of more than 18 plans in 2015. He also repeated his previous statement that a combined Aetna and Humana would still control only 8 percent of the Medicare market.

Further, as Swedish and expert witness Paul Ginsburg noted, many of the new entrants into the Medicare Advantage space are health systems themselves.

Yet Pollack mentioned a different report, from the Commonwealth Fund, that found 97 percent of U.S. counties already have little or no competition in the MA market.

As one of that report's authors told FierceHealthPayer, though, the two reports aren't necessarily at odds, because while beneficiaries can choose from several plans, a few large insurers, like UnitedHealth and Humana, still dominate in terms of market share.

Still, as Consumer Union Senior Policy Counsel George Slover noted in his testimony, groups like his "are concerned these deals will create too much concentration in too many markets."

Should the deals be considered on a national or local level?

Both Bertolini and Swedish mentioned in their testimonies that they believe healthcare is fundamentallsy local, and that therefore their respective merger deals should be considered on that basis.

Blumenthal, however, wasn't convinced.

"Yes, all healthcare is local, like all politics is local, but there is national politics, there are national markets, and those markets are profoundly important for the Department of Justice to review," he said while questioning Bertolini and Swedish.

Sen. Orrin Hatch (R-Utah), for his part, asked the expert witnesses simply, "what's the right way to define the health insurance market?"

"In some markets--markets for individuals, for small groups, some of the large-group markets--[those are] very local markets," Ginsburg said. "Medicare Advantage is a very local market. For large, self-insured employers, a lot of that is a national market, so really that's quite distinct."

For more:
- here's the hearing replay

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