Consolidation—the acquisition of one competing business entity by another—is an ongoing issue in the health insurance and hospital markets. After consolidation, it's common that fewer choices and provider networks are available.
There is concern about the health impact of consolidation; however, there has been far more study of hospital mergers than insurance consolidation. Studies have shown that all too frequently after hospital deals, prices are higher, quality of care deteriorates and savings are not passed along to consumers.
The scope of currently proposed insurance mergers has led to increased government and media scrutiny of consolidation in the sector. Health insurance companies sell a product, insurance, and purchase one, healthcare. Excessive consolidation at the selling end can result in a monopoly, with anti-competitive marketing practices and higher costs to consumers. At the purchasing end, it can lead to monopsony, where one giant buyer negotiates with multiple sellers in the local market and pays healthcare providers unfairly low reimbursement for services.
In 2014, Aetna, Anthem, Blue Cross and Blue Shield plans, Cigna and UnitedHealth Group controlled 83% of the national insurance market, up from 79% in 2010. The proposed mergers that have elicited new concern—the $37 billion deal between Aetna and Humana and the $53 billion deal between Anthem and Cigna—would dramatically and possibly irreparably compromise healthcare in the U.S.
Insurance company mergers are subject to federal antitrust laws. Recent congressional hearings elicited testimony from key stakeholders, including the American Hospital Association and the American Medical Association. Several key points were made: