Bigger is not better.
That’s the opinion of the American Medical Association (AMA) and some healthcare experts when it comes to two proposed large mergers in the healthcare insurance industry.
Last week, AMA officials strongly reiterated their opposition to the consolidation of Anthem and Cigna and the merger between Aetna and Humana.
“The AMA analyses show that Anthem-Cigna and Aetna-Humana mergers would significantly compromise market competition in the health insurance industry and threaten healthcare access, quality, and affordability,” said Dr. Andrew W. Gurman, AMA president, in a statement.
In July, the U.S. Justice Department announced it had filed lawsuits to block the two pending mergers.
The federal judge in the case scheduled the trial opening for Dec. 5. A decision is expected in mid-January.
Arguments for and against
Officials at Anthem and Aetna say the mergers would allow the two new, larger companies to operate more efficiently.
They said that would drive down costs and ultimately give consumers more healthcare choices.
“Together, Anthem and Cigna, who have limited overlap in a highly competitive industry, will be in a better position to improve consumer choice and quality,” Anthem officials said in a statement to Healthline. “Most of all, we will be better able to lead the transition to value-based care that will reduce costs while improving health outcomes.”
Aetna executives feel much the same way.
“We continue to believe the combination of Aetna and Humana will improve the healthcare system and offer consumers more choices and greater access to higher quality, more affordable care,” Aetna officials said in a statement to Healthline. “Our proposed transaction is primarily about the Medicare marketplace, where there is robust competition and choice.”
However, AMA officials don’t see it that way.
They point out that Anthem, Cigna, Aetna, and Humana are four of the five biggest health insurance companies in the United States.
If the mergers go through, that would leave the country with three large health insurance firms instead of five.
They say an updated analysis done by their organization shows the mergers would “collectively quash competition” in 24 states.
They conclude the Anthem-Cigna merger alone would diminish competition in 121 metropolitan areas in 14 states.
The Aetna-Humana merger, they say, would reduce competition in 51 metro areas in 15 states.
AMA officials say they will work with state attorneys general to stop the consolidations.
“High-quality medical care is only possible if regulators enforce antitrust laws to prohibit harmful health insurance mergers that run counter to patients' best interests,” Gurman said in his statement.
Will consumers see cost savings?
Kurt Mosley, vice president of strategic alliances for Merritt Hawkins health consultants, tends to agree with the AMA.
Mosley told Healthline the mergers would create less competition.
He added the consolidations could help reduce expenses for the newly created firms, but it’s uncertain whether those cost savings would be passed along to consumers.
“That’s yet to be seen,” Mosley said. “If we go from five to three big insurance firms, competition will decrease and costs could go up.”
Another big question, Mosley said, is whether these mergers will help healthcare innovation or hurt it.
“I think the Justice Department wants to protect the interests of the American consumer,” he said.
This is not the first time the Obama administration has stepped in to stop a healthcare merger.
Among other deals, federal authorities in April joined opponents in helping scrap a proposed $150 billion deal between Pfizer and Allergen.