TMA Tells DOJ Aetna-Humana Merger Would Be Bad for Texas

Oct. 12, 2015    

The Texas health insurance market would suffer from reduced competition and potentially higher prices if the federal government approves the pending merger between Humana, Inc. and competing health insurance company Aetna, Inc. That is the Texas Medical Association’s (TMA’s) message to the U.S. Departmentof Justice (DOJ) Antitrust Division. According to TMA, the merger also raises concern over anticompetitive effects in the Texas Medicare Advantage insurance market. 

If the merger happens, TMA warns, patients will lose. The association’s comment letter cites data showing the purchase would give the new company “enhanced market power” in San Antonio, Houston, Austin, El Paso, Corpus Christi, and many other Texas markets.

In a letter to DOJ, Joseph Valenti, MD, chair of TMA’s Council on Socioeconomics, warns the newly merged health insurance giant would control 36 percent of that market in Texas. Fewer health plan options mean fewer choices for patients, both in insurance and, ultimately, in access to physicians’ care.

TMA also sounds the alarm on the new combined company’s potentially enhanced ability to set prices for physician services. “Since the large majority of health care services provided by physicians are paid for by insurers and other third-party payers, physicians must be able to secure adequate payment from insurers in order to cover all operative costs and remain profitable,” Dr. Valenti wrote. Texas’ many one- to three-physician groups “may have very little negotiating leverage to allow them to secure favorable pricing terms,” his letter says. 

TMA says the unfettered price-setting power resulting from the merger could force physician practices out of business in two ways: 

  1. Unilaterally reducing contract prices below the actual cost to produce services, or

  2. Excluding the physician from the plan network. 

“Physicians who are forced out of business may permanently leave patient practice or relocate, reducing the local availability of medical services and causing harm to patients due to the reduced availability of medical care,” Dr. Valenti wrote.

The 2010 Horizontal Merger Guidelines and an American Medical Association analysis of the merger titled Competition in Health Insurance: A Comprehensive Study of U.S. Markets found the proposed merger likely would enhance market power in these Texas markets and market segments: 

  • Combined HMO, preferred provider organization (PPO), and point of service plan market: El Paso, San Antonio, and Corpus Christi;

  • HMO market: Houston-Sugar Land-Baytown, Austin-Round Rock, and San Antonio; and

  • PPO market: El Paso, San Antonio, Houston-Sugar Land-Baytown, Corpus Christi, Fort Worth-Arlington, Austin-Round Rock, Victoria, and Killeen-Temple-Fort Hood. 

TMA is the largest state medical society in the nation, representing more than 48,000 physician and medical student members. It is located in Austin and has 110 component county medical societies around the state. TMA’s key objective since 1853 is to improve the health of all Texans.


Contact: Brent Annear (512) 370-1381; cell: (512) 656-7320; email: brent.annear[at]texmed[dot]org
Marcus Cooper (512) 370-1382; cell: (512) 650-5336; email: marcus.cooper[at]texmed[dot]org
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Last Updated On

June 17, 2016

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