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September 08, 2015 01:00 AM

Docs, hospitals contend insurer mergers will quash competition

Bob Herman
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    If the pending mergers between Anthem and Cigna Corp., and Aetna and Humana are approved by the federal government, major insurance markets in almost half the country would suffer from reduced competition and potentially higher prices, according to a new analysis released by the American Medical Association.

    The latest shot from the national doctors lobbying group comes a week after the American Hospital Association blasted the insurance mergers with its own letter.

    The AMA said both transactions combined would exceed federal antitrust guidelines in 97 metropolitan markets in 17 states. "Significant competitive concerns" would exist in 154 metro areas in 23 states, according to the AMA.

    The AMA looked at commercial health insurance data from 2013 to reach its findings.

    The tie-ups would result in higher prices for consumers and lower payments for physicians and hospitals while reducing care-delivery innovation, the group said.

    “A lack of competition in health insurer markets is not in the best interests of patients or physicians,” AMA President Dr. Steven Stack said in a statement. “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.”

    Stack has also been critical of health insurers over the controversial issue of surprise, out-of-network bills, arguing insurers hamstring doctors to accept “usual and customary” payment rates that doctors deem are below fair market value.

    The insurance companies seeking the mergers have made the opposite claim. They say the deals will reduce premiums by lowering overall overhead costs for insurance companies and giving insurers bargaining power against large hospital systems, whose own merger wave has concentrated the delivery of care in numerous markets. Aetna and Anthem have both said they would save billions of dollars by completing their deals and rooting out unnecessary administrative costs.

    The AMA's study is part of its annual review of insurance market competition. It found insufficient competition in seven out of 10 metro areas studied, with at least 40% of markets having a single insurer with over 50% of the commercial insurance market.

    The 10 states with the least competitive markets were led by Alabama, followed by Hawaii, Delaware, Michigan, Alaska, South Carolina, Louisiana, Nebraska, Illinois and North Dakota.

    The AHA has also objected to the planned insurance mergers. It said the deals threaten “serious and widespread competitive harm” by reducing competition in the sale of Medicare Advantage plans, the AHA said in a letter to the U.S. Justice Department last week that opposed Aetna's bid for Humana. The AHA also urged the feds in an August letter to scrutinize the anticompetitive scenarios of the Anthem-Cigna marriage, which would primarily affect commercial health plans.

    A House subcommittee will hold its first hearing on healthcare competition this Thursday, probing whether the consolidation among hospitals, doctor groups and insurance companies benefits consumers and the broader delivery system.

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