AHA16: Experts say insurer mergers bad for providers, consumers

WASHINGTON, D.C. -- Payers and providers remain deeply divided over health insurance company consolidation--a fact highlighted during an executive briefing at the American Hospital Association's annual meeting on Monday.

Of particular concern, according to the panelists, are the two major pending health insurer mergers--Aetna-Humana and Anthem-Cigna--which would whittle the five largest for-profit payers down to three.

"The unprecedented level of consolidation that these deals threaten could make health insurance more expensive and less accessible to consumers," moderator and AHA board member Thomas Miller said. "We are also very concerned that these deals could hinder the momentum that hospitals have established to move the nation's healthcare system forward."

The AHA has been a fierce opponent of the two deals, as its leaders have testified against the mergers at hearings on Capitol Hill as well as sent detailed letters to the Department of Justice arguing against the transactions.

These efforts are justified, argued Northwestern University professor Leemore Dafny (right), because while there is no definitive academic research proving that past insurer mergers have created cost efficiencies or improved quality and innovation, there is evidence that provider reimbursement decreases and that insurance premiums go up.

The data is also clear, she said, that the health insurance sector is already composed of "highly concentrated markets that have grown more concentrated over time."

That is likely why, antitrust attorney David Balto (left) pointed out, U.S. Assistant Attorney General William Baer described the two major insurer mergers as a "game-changer" for the industry and said the DOJ is conducting a careful review of the deals.

But as regulators review the deals, Balto said, they must be skeptical of the companies' proposed remedies for potential anticompetitive effects--particularly when it comes to divestitures. Recent research from the Center for American Progress, he noted, shows that in previous insurance mergers divestitures did little to maintain competition in Medicare Advantage markets because many divested entities failed. 

It's also important to note, Balto said, that the DOJ isn't the only regulator reviewing the mergers. Twenty-five state attorneys general and 26 state insurance commissioners also are in the mix--and he argues the latter have significant advantages over the DOJ because of their industry expertise and close connection to consumers.

Hospitals and physician practices, meanwhile, have faced antitrust scrutiny of their own. For example, the Federal Trade Commission recently headed to U.S. District Court to block a proposed merger between Advocate Health Care and NorthShore University HealthSystem in Chicago--a deal opposed by Blue Cross Blue Shield of Illinois.

But that doesn't mean hospital leaders should be "bashful" about opposing the two major insurer mergers, said antitrust attorney Doug Ross (right) of Davis Wright Tremaine LLP. After all, he pointed out, it's hospitals that "are bearing the full brunt of antitrust litigation and investigations."

Dafny, however, pointed out that federal regulators are unlikely to accept the idea that either payers must consolidate in response to provider mergers or vice versa.

"Vigorous antitrust enforcement to protect consumers is necessary in both sectors," she said.

Related Articles:
A glimpse into the DOJ's review of health insurer mega-mergers
Critics question justification for health insurer mergers
Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition
American Hospital Association takes aim at Anthem-Cigna merger
In latest hearing, provider groups come out swinging against insurer mergers
Report: Divestitures in Aetna-Humana merger won't help Medicare Advantage competition
After merger divestitures, MA market will be primed for disruption