The Affordable Care Act is a law, and consolidation is increasing throughout healthcare. Those were roughly the only two points that House politicians and healthcare witnesses agreed on Thursday.
The House Judiciary Committee's Antitrust Subcommittee held a hearing on the state of competition among hospitals, doctors and insurance companies since the ACA was passed several years ago. The rancorous meeting included a shouting match between two House members, several narratives that pitted the healthcare groups against each other, and no clear indication of how healthcare markets will be regulated going forward.
Congress decided to examine mergers and acquisitions in the healthcare industry following the massive deals announced this summer by health insurers Aetna and Anthem. Anthem is buying rival Cigna Corp. for $54 billion, while Aetna is acquiring Medicare Advantage powerhouse Humana for $37 billion.
Those transactions will be the subject of separate congressional hearings later this month. On Thursday, the ACA's effects on mergers and competition headlined the event. Republicans once again took the opportunity to use President Barack Obama's signature law as a political punching bag while Democrats stood up for it.
Subcommittee Chairman Tom Marino (R-Pa.), House Judiciary Committee Bob Goodlatte (R-Va.) and Rep. John Ratcliffe (R-Texas) took shots at the health reform law, with Ratcliffe saying it has directly led to small hospital closures and higher insurance premiums in his home state. Marino and Rep. Hank Johnson (D-Ga.), the subcommittee's ranking member, also got into a verbal tussle over allowing more time for one of the witnesses to answer a question.
Healthcare transactions—most commonly health systems buying hospitals, physician groups and post-acute providers while insurers scoop up other insurers and physician groups—were happening well before the ACA went into effect, according to Thomas Greaney, a law professor at St. Louis University, and Dr. Scott Gottlieb, a fellow at the conservative American Enterprise Institute. Gottlieb argued the ACA has “hastened” these deals, but Greaney said it was “erroneous” to draw a causal relationship. The law depends on new forms of competition among providers and insurers, not monopolies and oligopolies, he said.
Rick Pollack, CEO of the American Hospital Association, defended transactions among his group's members. He said the ACA's shift toward value-based payments and better care coordination is beneficial to the broader delivery system, but not all hospitals can get there alone. In some instances, a health system is buying a hospital to keep the facility open for the community.
“Many small, stand-alone and rural hospitals are particularly in need of partners,” said Pollack, who just started as the new chief of the hospital lobbying group. “The cost of acquiring and maintaining electronic health records …can tip the financial balance of these organizations.”
In prepared testimony, Pollack and others said the pending health insurance acquisitions pose a much bigger threat to consumers and healthcare costs. Pollack added that the deals “appear motivated by top-line profits.”
Aetna and Anthem have expressed confidence the U.S. Justice Department will approve their bids, although both companies may have to divest some health plans in overly concentrated markets. Insurers have more broadly argued that competition among health plans occurs locally, and mergers shouldn't be viewed from a single angle.
“Many mergers and acquisitions are beneficial to consumers,” said Dan Durham, executive vice president at America's Health Insurance Plans, the lobbying group for insurers. “The bottom line is that consolidation should be looked at on a case-by-case basis.”
Durham charged that hospital consolidation is driving higher healthcare prices, but Pollack refuted that argument. He said AHIP relies on “old” and “incomplete” data and cited that recent hospital price growth has been historically low.
However, a body of research shows that both hospital and health insurer mergers rarely lead to significantly lower prices for patients. Insurance mergers that try to keep up with the growing size of local hospital systems should not be viewed favorably by the government, Greaney of St. Louis University said. He called this defense the “sumo wrestler theory” and said it's a fallacy to think dominant insurers bargaining with dominant hospitals will help the industry.
“Sometimes we find out that the sumo wrestlers would rather shake hands than compete,” Greaney said.
Small and midsized physician practices are often caught in the middle of hospitals and payers sparring over market share. Dr. Barbara McAneny, a board trustee at the American Medical Association and a practicing oncologist, said the ACA “provides meaningful opportunities for physicians to compete and improve quality, but it is not yet clear whether continuing barriers to market entry can be overcome to achieve the underlying goals of the legislation.”
Those barriers, such as strict antitrust parameters and payer negotiation rules for physician practices, have pushed many doctors to pursue salaried jobs at hospitals instead of running their own independent practices. “While the AMA supports the right of physicians to choose employment, we focus on the word 'choose,' ” McAneny said. “We don't believe competition should force physicians to choose employment over self-employment.”
Gottlieb of the American Enterprise Institute, a right-leaning think tank that has opposed the ACA, said accountable care organizations and other payment reforms embedded in the law are “pervasive biases” that push physicians to sell out to hospitals. And, he said, when physicians join the payrolls of hospitals, their productivity goes down, which could hinder clinical quality.
“That should worry us,” he said.
The Senate and House will each hold their own hearings on the Anthem-Cigna and Aetna-Humana deals later this month.