Now that four of the country's five largest health insurers have announced merger deals, the focus turns to how federal and state regulators will respond to such significant industry consolidation.
When Aetna and Humana revealed they struck a deal, views were mixed about just how much scrutiny the merger would face from the justice department. Aetna CEO Mark Bertolini had hoped to get an edge with regulators by announcing the first of the mega-deals, and as expected, said he believed "this is a very manageable transaction."
Industry groups such as the American Hospital Association, however, indicated they wanted regulators to heavily scrutinize the deal's impact on providers and consumers, FierceHealthPayer reported. Multiple state officials also have indicated they intend to review the deal's effect on competition, and now that there are two deals in the works, federal regulators are likely to consider the effects of both mergers together.
A familiar script surrounded the Anthem-Cigna merger, which the companies announced Friday. On a call with investors, Cigna CEO David Cordani and Anthem CEO Joseph Swedish expressed confidence that the deal will be approved, though Swedish noted that he had not yet spoken to regulators about it.
Yet the American Medical Association (AMA) was hardly ambiguous in its response.
"Given the troubling trends in the health insurance market, the AMA believes federal and state regulators must take a hard look at proposed health insurer mergers," the organization said in a statement. Antitrust laws that prohibit harmful mergers must be enforced and anticompetitive conduct by insurers must be stopped."
While both deals will still require approval from state insurance commissioners, they may actually face slightly less federal regulatory scrutiny because of the effects of the Affordable Care Act, according to the New York Times. The ACA's creation of online exchanges increases competition because it allows insurers to expand into new markets without having to hire agents--though "it's unclear whether that would be enough to counterbalance concerns over the top five insurers' currently chunky market shares," the article notes.