The CEOs of Aetna and Anthem returned to Capitol Hill on Tuesday to defend their respective transactions to House members, the second such congressional hearing in a week, but hospitals and doctors said the deals remain unjustified and deserve sharp federal scrutiny.
Aetna CEO Mark Bertolini and Anthem CEO Joseph Swedish recited similar testimony from their Senate hearing last week. Bertolini said Aetna's $37 billion acquisition of Humana is almost entirely about enlarging its Medicare Advantage business, and if the transaction closes, only 8% of all Medicare beneficiaries would be in an Aetna or Humana plan. Most seniors would still be enrolled in the government's traditional fee-for-service Medicare program.
Anthem is buying Cigna Corp. in a deal valued at $54 billion, which would bolster its commercial business among self-insured employers. Swedish said savings in that business line would go back to the employers since those companies take on the financial risk of their workers' health claims.
Providers, however, reiterated their arguments that each transaction would significantly lessen competition in various markets and lead to higher premiums for consumers.
“We are at a critical decision point on health insurance mergers,” said Dr. Andrew Gurman, president-elect of the American Medical Association. “Once consummated, there is simply no going back. You cannot unscramble an egg.”
Bertolini said more hospitals are starting their own insurance plans, especially in Medicare Advantage. That indicates that entering the health insurance market is not as onerous as some believe and that competition is still robust despite a report from the Commonwealth Fund that says otherwise, he said. But Tom Nickels, an executive vice president at the American Hospital Association, rebuffed that point, saying the hospital plans are just starting up.
“We're at the infancy stage here,” Nickels said of hospital-owned insurance plans. “The plans pale in comparison here to the size of these mergers.”
Rep. Hakeem Jeffries (D-N.Y.) asked the witnesses why there shouldn't be a “reasonable expectation” that consumers will benefit from these deals. Ed Haislmaier, a health policy researcher at the conservative Heritage Foundation, said the same thing could be asked of hospital and physician mergers. But based on his analysis, the pending insurance deals don't pose any immediate problems since the plans don't overlap in many areas—contrary to what the AHA and several health economists have found.
“The issue from a regulatory-consumer perspective is not whether they provide good, but whether they provide harm,” Haislmaier said.
Jaime King, a professor at the University of California Hastings College of Law, said a more rigorous standard should be used. “Is that a potential harm to competition? That instead of going into these areas on their own, (Aetna and Anthem) are attempting to acquire somebody who is already there and successful?” King said.
The U.S. Justice Department is reviewing both deals. Aetna and Anthem both expect approval in the second half of 2016.