A study by the AMA argues the proposed insurance mergers would significantly reduce competition in 154 metropolitan areas within 23 states. To recap, four of the five largest health insurers are proposing to join together in two mergers: 1) Anthem and Cigna, and 2) Aetna and Humana. If they go through, only three major insurers would remain, including UnitedHealth Group. The AMA is calling for these mergers to be blocked.
AMA States Mergers Will Hurt Patients and Providers
“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” says AMA President Steven J. Stack, M.D. “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.”
The AMA study is based on 2013 data captured from commercial enrollment in fully and self-insured plans and includes participation in consumer-driven health plans. The proposal to reduce major insurers down to just three should be viewed in the context of the “unprecedented lack of competition that already exists in most health insurance markets”. The AMA study found the following:
- A significant absence of health insurer competition was found in seven out of 10 metropolitan areas studied. These markets are rated “highly concentrated,” based on federal guidelines used to assess the degree of competition in a given market.
- In nearly two out of five metropolitan areas studied, a single health insurer had at least a 50 percent share of the commercial health insurance market.
- Fourteen states had a single health insurer with at least a 50 percent share of the commercial health insurance market.
- Forty-six states had two health insurers with at least a 50 percent share of the commercial health insurance market
Insurers Argue Mergers will have “Limited Overlap”
Insurers say the criticism of the mergers is driven by the self-interest of providers who are afraid their payments will be cut. Anthem spokesperson Kristin Binns told Bloomberg Business that Anthem and Cigna will have “limited overlap in a highly competitive industry.” By combining, the companies will increase their efficiency and reduce operational costs. But American Hospital Association senior vice president Melinda R. Hatton told the New York Times that there is no guarantee that insurers will pass these savings on to consumers.
The Road Ahead
The chief executives of Anthem and Aetna are currently meeting with Senate sub-committees to win support for their deals before their formal hearings. If approved, Aetna and Anthem will have about $115 billion in annual revenue, and along with UnitedHealth Group, to create a Big Three in control of the federal and private health plan market.
What do you think of the proposed insurance mergers? Do you agree with the analysis that limited competition will hurt patients and providers? Comment below.