American Medical Association: Insurer mergers would diminish competition

With a new study that examines health insurance competition in various markets, the American Medical Association (AMA) joins its fellow provider groups in turning a critical eye toward pending consolidation among major insurers.

The study indicates that a merger between Anthem and Cigna would exceed federal antitrust guidelines intended to preserve competition in 85 metropolitan areas within 13 states, according to an AMA announcement of the findings. The Aetna-Humana merger, meanwhile, would "diminish competition" in 58 metropolitan areas within 14 states.

"If a health insurer merger is likely to erode competition, employers and patients may be charged higher than competitive premiums, and physicians may be pressured to accept unfair terms that undermine their role as patient advocates and their ability to provide high-quality care," AMA President Steven J. Stack, M.D., said in the announcement.

In the current market, 7 in 10 metropolitan areas included in the study were rated "highly concentrated" based on federal competition guidelines, and 2 in 5 metropolitan areas featured a single insurer that held 50 percent of the market share.

These findings echo that of a recent Commonwealth Fund brief, which found that only one county in the U.S. has a competitive Medicare Advantage (MA) market. The American Hospital Association (AHA) cites that brief in a recent letter to the federal government warning about the anticompetitive effects of the Aetna-Humana merger; it also has criticized the Anthem-Cigna merger in a previous letter.

While Aetna does not have access to the full AMA report, it notes that the report is based on data from 2013, Cynthia Michener, a spokeswoman for the insurer, writes in an email to FierceHealthPayer. And in response to the AHA's recent letter regarding its merger, the company points out that MA members could choose from an average of 18 plans in 2015. In addition, Aetna and Humana have the greatest number of plans rated four stars and higher by the Centers for Medicare & Medicaid Services, and many of the new entrants to the MA marketplace are providers themselves, Michener notes.

The major provider groups don't appear as though they plan to back down in their campaigns against health insurer consolidation, however. Representatives from the AHA and AMA are set to make the organizations' case against the mergers before a U.S. Senate antitrust panel this week, according to Forbes.

But the merging insurers also have a voice in Washington, as both Aetna and Cigna have hired teams of lobbyists in recent months.

To learn more:
- here's the AMA report (membership or purchase required)
- check out the AMA announcement
- read the Forbes piece

Related Articles:
Competition hard to come by in Medicare Advantage markets
Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition
American Hospital Association takes aim at Anthem-Cigna merger
All eyes on how regulators will respond to massive health insurer mergers