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’
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:
- Unilaterally reducing contract prices below the actual
cost to produce services, or
- 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
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: firstname.lastname@example.org
Marcus Cooper (512) 370-1382; cell: (512) 650-5336; email: email@example.com
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