Health insurance deals may increase costs for hospitals, physicians and patients
Two proposed mergers among four of the five largest health insurance companies in the U.S. would decrease competition and increase costs for hospitals, physicians and patients, according to an American Medical Association (AMA) analysis.
The AMA analyzed data from the 2013 HealthLeaders-InterStudy, which included enrollment figures in health maintenance organizations, preferred provider organizations, point-of-service plans and consumer-driven plans.
Of the 388 metropolitan areas studied, 70 percent were highly concentrated based on horizontal merger guidelines from the U.S. Department of Justice and Federal Trade Commission. At least one insurer had a market share of at least 30 percent in 89 percent of the areas, while at least one insurer had a 50 percent or higher market share in 38 percent of the markets.
“Conceptually, mergers and acquisitions can have beneficial and harmful effects on consumers,” the researchers wrote. “However, only the latter has been observed. It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power—the ability to raise and maintain premiums above competitive levels—instead of passing any benefits obtained through to consumers.”
In July, Aetna agreed to acquire Humana and Anthem agreed to acquire Cigna. If antitrust regulators approve the deals, those two companies and UnitedHealth Group would account for a large percentage of the health insurance marketplace.
The AMA researchers noted that the Anthem-Cigna merger would enhance market power in 85 metropolitan areas in 13 states and diminish competition in up to 111 metropolitan areas in all 14 states in which Anthem currently operates.
Meanwhile, the Aetna-Humana deal would enhance market power in 15 metropolitan areas in seven states and diminish competition in up to 58 metropolitan areas in 14 states.
“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” AMA President Steven J. Stack, MD, said in a news release. “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. Given these factors, AMA is urging federal and state regulators to carefully review the proposed mergers and use enforcement tools to preserve competition.”
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.