The U.S. Justice Department's antitrust probe of two massive proposed insurance mergers has dominated the spotlight as hospitals, doctors and lawmakers fret over the impact of allowing Anthem to absorb Cigna Corp. and Aetna to swallow Humana.
But insurance regulators in most states also have a shot at derailing or modifying the deals and will spend the first half of 2016 crunching data and holding public hearings.
The insurers won't be able to merge in states that turn down the proposals. That means rejections from even a few of the most-populous states could break the deals by diluting their financial feasibility.
“A handful of commissioners really could stop it nationwide,” said John Oxendine, a former Georgia insurance commissioner.
Peter Pavarini, immediate past president of the American Health Lawyers Association, agreed that scenario “could be a showstopper.”
Aetna has said it is confident its proposal “will receive a fair, thorough and fact-based review from the Department of Justice and the states.” So far, Michigan, Utah and Vermont have approved it.
Anthem said in a statement that it's having “collaborative and productive conversations” with state leaders.
The Justice Department's analysis will focus mainly on the mergers' effects on competition. But state laws call on insurance commissioners also to assess whether the mergers would hurt policy holders or the public, said Jay Angoff, a former Missouri insurance commissioner and New Jersey deputy insurance commissioner.
It's a broad standard that gives state insurance commissioners wider authority than the federal antitrust enforcers. They can set conditions such as freezing or limiting premium increases for set periods of time.
Also, state insurance commissioners, unlike the Justice Department, must hold public hearings. “They have a process that's transparent, and I think that transparency really helps protect consumers,” said David Balto, an antitrust attorney and former policy director of the Bureau of Competition at the Federal Trade Commission. Balto recently helped launch a group that's fighting the mergers.