TMA: Insurance Merger Would Limit Patient Choice, Raise Cost

Dec. 15, 2015     

A proposed supersize merger in the Texas health insurance market raises concerns about fewer health care options and higher costs for patients, according to Texas Medical Association’s (TMA’s) Texas Medicine magazine.

Aetna seeks to acquire Humana Inc. in a deal focused largely on buying up Humana’s Medicare Advantage business. If the $37 billion Aetna-Humana merger is approved, the newly combined entity would have a significant impact across Texas — and 13 other states — likely enhancing Aetna’s market power to concerning levels per the federal government’s own standards, according to a comprehensive American Medical Association (AMA) analysis. Aetna and Humana stand among the top five commercial payers in Texas, along with Health Care Service Corporation (the parent company of Blue Cross and Blue Shield of Texas), United Healthcare, and Cigna. (Cigna is part of another proposed merger of health insurance giants, as Anthem Inc. looks to take over the carrier for $50 billion.) Already, health insurance markets in Texas and across the country are highly concentrated into the hands of a few plans. The new Aetna-Humana entity would control nearly three-quarters of the private HMO insurance market in Houston, and 36 percent of the Medicare Advantage market across Texas, according to AMA. 

Based on similar health insurance mergers over the past 20 years, TMA physicians worry Texas patients would encounter a shrinking choice of doctors within their health insurance networks, and higher insurance premiums and deductibles. Physicians assert any supposed benefits would come at doctors’ and patients’ expense in the form of take-it-or-leave-it payment contracts and take-it-or-leave-it insurance premiums, because the proposed new health insurance giant’s dominant commercial insurance market share would wield all control. Doctors therefore no longer would be able to negotiate contracts beyond accepting or not accepting whatever the insurer offered. That “really affects the quality and availability of care because physicians are disempowered to be effective advocates for our patients,” said Houston neurologist William Gilmer, MD. He said he already feels that squeeze. “It goes without saying it’s dominated and completely monopolized by big health plans here.”   

The Aetna-Humana merger would increase the combined company’s power in Texas as a whole and in several commercial market segments, according to a TMA breakdown of AMA data.

Using U.S. Department of Justice (DOJ) and Federal Trade Commission antitrust and horizontal merger guidelines to analyze the merger, the consolidation would be considered likely to enhance market power: 

  • In the El Paso, San Antonio, and Corpus Christi metropolitan areas for the combined HMO, PPO, and point-of-service plan markets;
  • In the Houston-Sugar Land-Baytown, Austin-Round Rock, and San Antonio metropolitan areas for the HMO market; and 
  • In the El Paso, San Antonio, Houston-Sugar Land-Baytown, Corpus Christi, Fort Worth-Arlington, Austin-Round Rock, Victoria, and Killeen-Temple-Fort Hood metropolitan areas for the PPO market.  

The merger also would raise significant competitive concerns in more than a dozen other areas of the state.

Joseph S. Valenti, MD, chair of TMA’s Council on Socioeconomics and a Denton obstetrician-gynecologist, authored a letter on behalf of TMA to DOJ opposing the Aetna-Humana deal.

“Bigger isn’t always better. Bigger means less competition. And less competition usually means higher prices. We’ve already seen in a lot of places it certainly doesn’t mean lower prices. Meanwhile, the only things not going up are patients’ coverage and physician reimbursements,” Dr. Valenti said.

The Aetna-Humana merger will go through a lengthy federal approval process, and if cleared, would not complete until the end of 2016. 

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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